Proposal: Launch $OPIUM bonds on Olympus Pro

[parasite]

Summary

Launch $OPIUM bonds on Olympus Pro to sell $OPIUM at a discount for Uniswap V2 DAI/OPIUM LP tokens.

• Amount: 60’000 OPIUM
• Period: 1 month (4 weeks)
• Vesting: 7 days

Rationale

What’s Olympus Pro

Olympus Pro is the new industry-standard platform to help protocols acquire their own liquidity. Protocols no longer need to pay out high incentives to rent liquidity, while also guaranteeing the permanence of liquidity to facilitate transactions.

Olympus Pro solves for liquidity problems by providing bonds-as-a-service for a small fee.

Instead of staking their LP (liquidity provider) tokens for farming rewards in a pool 2, users can exchange their LP tokens for the protocol’s governance tokens at a discounted rate. This is done through a process called Bonding. As the protocol never sells these LP tokens, the liquidity is effectively locked within its treasury.

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Simply saying Olympus Pro allows DAOs to purchase LP tokens from liquidity providers in exchange for their native token at discount and become the owner of the token liquidity on DEXes.

Why do we need it?

Protocol Owned Liquidity guarantees users that there is always sufficient liquidity for normal market operation.

It may improve and replace in future the way that Liquidity Mining works. Current Liquidity Mining just gives away free $OPIUM tokens and doesn’t guarantee the sustainability of the liquidity on DEXes.

By selling $OPIUMLP tokens for LP tokens at discount, the protocol will reward those, who perform long-term contributions to DAO and permanently lock LP tokens in DAO’s treasury.

Paid out $OPIUM tokens will be vested over 7 days period, which will ensure discount buyers hold their positions.

Why DAI?

Similar reason as the neighbor proposal for Liquidity Mining: to reduce the correlation of $OPIUM from the price of ETH and 1INCH and make it more sustainable to market fluctuations.

Why Uniswap V2?

Olympus Pro supports bonds of ERC20 tokens, thus Uniswap V3 can not be used. Uniswap is the biggest DEX in terms of network effect and volumes, so this seems to be a rational choice to pick a battle-tested DEX.

Pros / Cons

Pros

• Purchased LP tokens increase DAO’s treasury
• DAO will own LP tokens and ensure long-term liquidity provision

Cons

• Sold $OPIUM tokens may cause short-term sell pressure

Actions

• Ask for Olympus DAO assistance in deploying of the Olympus Pro for Opium DAO
• Allocate 60’000 OPIUM to sell for LP tokens via Olympus Pro over 28 weeks period with 7 days vesting period

It’s an experiment

As the current proposal is only experimental, we can measure its effects and performance with time and propose additional allocations of $OPIUM tokens on the same or different conditions in the future.

Also in case of the experiment’s success after some time we can launch bonds for G-UNI DAI/OPIUM (Uniswap V3)

[parasite]

Guys @Locutus and @KevinZ what are your thoughts on this? I see you performed some research on that topic already, really thrilled to hear your thoughts

[KevinZ]

TBH,It’s a good way to gain PCV for opium itself.My point is that we need launch extra staking pool if we select OlympusDAO pro service.
I think the success of OlympusDAO is more likely on its rebase mechanism, I think the majority of people who buy the bond would choose to stake their OHM due to the amazing APY,the ratio of OHM staked is nearly 80% while its highest value was 90% before,anyone who is interested in it could check it on OlympusDAO.
Why rebase matters?I think the insane APY could hedge the risk of high price volatility even price dumps 80%,staking could help reduce sell pressure as well.
Therefore I think we could launch opium staking pool with appropriate APY (the goal of opium is not to be reserve money, so insane APY is not suitable for opium)if we want to use Olympus Pro service.
Besides,we need talk about the function of opium staking pool, current opium staking pool is used for providing liquidity for opium call option.so what about we launch the staking pool for security just like stAAVE or veCRV.
BTW,I read the news about Bancor V3 while @andrey mentioned Balancer before,they are all good alternatives,we could discuss them together:)

[andrey]

I personally don’t understand it, heard a lot about OlympusDAO, need to take look closer.

interesting…

[parasite]

I think you are talking about Rebase + Staking, which is part of Olympus DAO, but not Olympus Pro

Olympus Pro alongside the Olympus DAO have bonding mechanism exactly for the same purpose: to ensure the sustainability of liquidity on DEXes by owning all of it. Olympus DAO on top of that does bonding to grow DAO treasury, but Opium might do that in the future as well, as this is out of the scope of current proposal.

Let’s compare Liquidity Mining program on any DEX (1inch, Uniswap, Bancor, etc.) with Olympus Pro bonding I offered to implement

1. Liquidity mining
   Allocate: 60’000 OPIUM
   Period: 1 month
   Expected APR: 80%
   Expected additional liquidity: 900’000 OPIUM ~ 1’350’000$
   Vesting: 90 days (DR.OPIUM)
   After program ends: Almost 100% of liquidity providers move liquidity to higher APR pools
   DAO loss: -100% of allocated $OPIUM

2. Bonds
   Allocate: 60’000 OPIUM
   Period: 1 month
   Expected ROI: 20% (discount)
   Expected additional liquidity: ~48’000 OPIUM ~ 72’000$
   Vesting: 7 days (Bonds)
   After program ends: 100% of liquidity stays
   DAO loss: -20% of allocated $OPIUM

Clearly DAO loss -20% is much better than -100%, even though the attracted liquidity is much smaller, but it’s sustainable and permanent

I know my estimations are rough and position is very “pro-bonds” biased, just trying to defend my proposal.

But I’m trying to have as rational as possible discussion here to determine weather it does make sense or not.

[parasite]

Regarding veCRV there was already a proposal, I’ll try to bump the discussions there

Proposal: Incentivized long term DAO participation

Summary Introduce smart contract to time-lock $OPIUM tokens which in return increases voting power on the Snapshot during the time-lock Rationale Long term commitments to DAO should be incentivized and one way to do so is to increase their (committers) voting power proportionally to their commitment (the time that tokens are being locked). Research Usage of Curve’s veCRV contract seems as the best way to implement the proposal, due to it being used in range of big DeFi projects and thus hug…

But veCRV is not used for security, right? It’s just a long-term staking rewards

[KevinZ]

I know your point. And my point is that only bond couldn’t benefit maximum for opium ecosystem.
let’s continue with your example, suppose users who get 20% discount all sell their opium on maturity, there will be a sell pressure for opium, if we could apply staking mechanism like VeCRV or smth else to delay the sell pressure, which means it will be a mild selling in the long-term:).
In VeCRV,the staker gets larger goverance weight and higher ROI if he selects longer staking period,it’s also good for active goverance memeber

[KevinZ]

Yes,so I have a question for that.Could we add security module with VeCRV mechanism?
VeOpium could fuction as goverance and security in the meantime.
I’m not sure for this, it might be insane We need more discussion on it

[sergelove]

ohh wow, it seems OlympusDAO pretty hot theme these weeks… pretty often listen about them from different sources…
thanx for your priposal @parasite , finally its time for me to carefully read about them to better understand their mechanics.

[sergelove]

Finally get my head deeper into Olympus PRO thing… still not all clear to me, but found today amazing analysis from PooltogetherDAO… please check this out guys!

Olympus PRO - 30 days analysis

@andrey @parasite @alirun