Title: Olympus Pro
Project Champion: LiveTheLifeTV#5415,
Date: October 11th, 2021
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.
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.
“The goal should always be to bootstrap and accrue long-term defensible value, rather than perpetually pay high interest on mercenary capital” — OlympusDao
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
- Launch BANK liquidity bonds
- Do Nothing
Move Proposal to Snapshot by end of October