Proposal: Olympus Pro

Title: Olympus Pro

Project Champion: LiveTheLifeTV#5415,

Date: October 11th, 2021

# Summary

Implement a bond program for the Bankless DAO to own its own liquidity. Protocol-owned-liquidity is the future of liquidity incentive programs. By implementing a bond program for BANK-ETH liquidity, bDAO can distribute its governance tokens to more users while also accumulating its own liquidity.

The proposed bond program would sell BANK at a discount in exchange for BANK/ETH LP tokens. The discount rate on bonds is achieved by a novel pricing mechanism that allows the market to set the discount. Basically, bond prices are decreased until a bond is purchased which then pushes up the price of the next bond.

# BACKGROUND

Olympus is offering to provide its expertise in bond contract management to support other DAOs interested in owning their own liquidity. This will include providing the UI for bonds and maintaining bond control variables to balance emissions with liquidity accumulation. In exchange for the implementation and community engagement, Olympus would take a 3.3% on all BANK bonds sold. Olympus will use the BANK earned as backing for the intrinsic value of OHM, which would act as a supply sink for BANK. BANK bonds would be offered with a week-long vesting period, which helps prevent immediate price impact from discounted tokens. This aligns the goals of the protocol with those of bond participants. Typically, higher bond volume is seen when users expect the price of the token to increase during the vesting period.

# MISSION & VALUES ALIGNMENT

Olympus has spent months studying and perfecting its own bonds. Their valuable insight will help bDAO get passive, self-regulating bond programs up and running. Bankless DAO will be featured on Olympus Pro X, a unified marketplace for bonds from a multitude of protocols. The marketplace will become the default destination for DeFi investors looking for discounted exposure to various tokens through this unique mechanism. A presence on this interface will be invaluable in reaching new investors, much like the value of listing on an exchange.

# SPECIFICATION

“The goal should always be to bootstrap and accrue long-term defensible value, rather than perpetually pay high interest on mercenary capital” — OlympusDao

More details Introducing Olympus Pro. A paradigm shift in the way protocols… | by OlympusDAO | Sep, 2021 | Medium

More links and info on Discord where I posted my daily research since 04/04

# FINANCIAL IMPLICATIONS

Allocate 5M BANK per month to target $3M of liquidity over the next six months. If we allocate 30M BANK out of 1B we dedicate 3% of total supply to fix our biggest pain point, low liquidity. And we will increase our onchain revenue by earning fees as the owner of our own liquidity.

# SUCCESS METRICS OR KPIS

• Discount rate < 10% on bonded BANK

• Minimal impact on BANK price

• Permanent liquidity source

• Increased treasury value from liquidity that also earns trading fees

• Exposure to paired asset in liquidity pool (ETH)

• bDAO can stake its LP tokens to provide additional runway

# NEXT STEPS

Sentiment Poll

  • Launch BANK liquidity bonds
  • Do Nothing

0 voters

Move Proposal to Snapshot by end of October

2 Likes

Wow, finally. I’ve been a fan of Olympus DAO for quite a while and they are killing it with their tokenomics. I also know that they are followers of the Bankless movement so this is a great collaboration between the two organisations.

This will help solve the BANK liquidity problem as well as giving Bankless ownership of the liquidity.

Thank you for putting together the proposal.

7 Likes

This is a great post @livethelifetv, thank you for the clear and concise presentation.

I had seen a lot about Olympus and its project but I hadn’t delved into how its protocol worked.

I will now have to dive in further!

Cheers

1 Like

Wow. This stretches my brain a little. Great proposal.

1 Like

Nice, have some experience directly and indirectly (via ICOs) with bonding curve models, what are some expected APY/APRs for LPs and will Olympus give us $BANK poolers ILP? :slight_smile:

Great proposal. All in.

1 Like

I’m not sure the 3.3% cut for Olympus is the right fit for Bankless DAO. If we were to accumulate $10M over say a year’s time we’d be paying $330,000. I have got a feeling that we could develop an independent bonding solution for less money if we have the devs and the patience.

Olympus is really doing well in this area so I agree we capitalize on their expertise. Others are coordinating with them already & seems to be very successful so far. Olympus keeps the BANK earned
as backing for the intrinsic value of OHM. I fully agree to move forward with this!

1 Like

I don’t think so ! It is the best way for the BANK holders

This finally gave me a reason to look into Olympus, and boy does it make me feel smooth brained.

I have one problem with this proposal: Where will the 5M/mo BANK come from? As per the S2 Spec, the Grants Committee has 7M for funding projects during the season.
This could go to snapshot, but keeping a tight lid on what goes to snapshot vs doesn’t is the entire reason we have a seasonal spec – it’s to bound what proposals go to snapshot and why (which also minimizes voter fatigue).

The solution is to wait until S3 and include this in the S3 spec. This has the added benefit of letting us realize our Balancer LM program. Imagine this: We run a LM program until the end of Season 2, giving us the maximal amount of time to deepen liquidity, and then we immediately offer discounted BANK for people to swap their LP tokens at the end of the program instead of liquidate.

Thoughts?

9 Likes

I’m gonna step on a few ppl’s toes by saying this but someone has to be the devil’s advocate here - isn’t Olympus another potential pyramid scheme, just like Titan was? Ie it works extremely well, until it doesn’t? Does anybody here actually understand the mechanics behind OHM and how they offer those crazy high APYs? I’m extremely sceptical about a ‘treasury backed currency with intrinsic value’ that ‘is able to constantly grow despite market conditions’. I am willing to be educated though.

Most importantly - what are the biggest risks to us here? If the value of OHM collapses to 0, does it only affect our yield, or does it affect the amount of BANK we are able to claim back from the pool?

1 Like

Appreciate your question, it’s hard to summarize 6 months of daily research in one reply, hope the bankless LLC podcast will answer some of your questions, but you can always read through our research and DM if you have done your homework. If every holder sells, and I’m the last man standing, I’ll get to claim half a billion in the treasury and I’ll be fine. What happens if every BTC holder sells and I’m the last man standing? Do I get to claim a bag of digital gold? The high APY’s are intended to make sure my share of the total market cap does not get diluted when new tokens are minted.

3 Likes

I think this is a really good question and important to answer.

Key bits:

BANK won’t be OHM. OHM is specifically and specially designed to have lots of token capabilities that BANK does not, to enable their economic vision. (burn, rebase, etc).

OlympusPRO is a liquidity ownership service. BANK will use OlympusPRO to incentivize the market to sell their LP tokens (liquidity) at a discount for BANK to the DAO.

Thus platform owned liquidity. They call this bonding.

This allows the platform to accrue the rewards from that liquidity, and hold risk for impermanent loss as a service to the community.

TLDR:
BanklessDAO will use the OlympusPRO platform bonding to purchase LP tokens that allow BanklessDAO to own its own liquidity pools.

This is part of a larger tokenomics initiative.

3 Likes

It would have to come from snapshot.
I do like the idea of the timing though.

Right now the large issue I see with our tokenomics is that we have isolated pools (balancer, sushi, uni) and with OlympusPRO we would begin owning those pools, thus accruing value, holding IL risk and having control over our liqudity.

The problems we still have is deployment.

This is where TOKEMAK enters the conversation and is our last stop for all tokenomic needs(IMO).

4 Likes

I’m sorry, i’ve tried reading this proposal a couple of times.

I really cannot understand the mechanics behind this proposal. (my background is i’ve invested in some stocks and Defi protocols, but i definitely need more training in this)

Also the fee of 3.3% sounds a tat high for me.

I will sit out.

Ok thanks @livethelifetv @Icedcool . I think I broadly understand what the owning of our own liquidity entails. Let me just rephrase the question - do I understand correctly that by taking part, we are taking ZERO exposure to the price of ohm? Just want to confirm. Thanks.

That is correct.

Olympus pro, simply allows us to buy bank/eth LP tokens for BANK, thus owning liquidity, the claim on interest and exposure to impermanent loss.

2 Likes

I’m for this. Timing is important but I don’t think it should wait until Season 3, BANK means nothing if it’s not moving and the more in circulation the more resistant it is to downward pressure. bDAO owning it’s own liquidity is important. This is a way to achieve that while rewarding DAO members.

1 Like

I’ll reiterate that circumventing our governance processes (seasonal spec) and taking something to snapshot in the middle of the season is a bad precedent that will have negative externalities. I have voted no and would rather commit 1M to the balancer campaign to deepen liquidity.

the 3.3% is in BANK tokens to are being held in the Olympus DAO treasury as skin in the game and to be fully aligned in this DAO-To-DAO collab. I would recommend watching the Bankless LLC podcast with Zeus from Olympus DAO The Secret Weapon of DeFi 2.0 | Zeus from Olympus DAO - YouTube

1 Like