Olympus Pro - first $250K GRO allocation analysis

OlympusDAO shared a dataset of GRO/PWRD bond activities based on the first $250K GRO allocation we made in November 2021 under Vote 004 (equivalent to 35,200 GRO at an average price of $7.1 per GRO token at the time). Gro team has conducted further analysis on participants to better understand the bonding activities.

Summary

  • Majority of bond activities (57%) were conducted by a network of bots that eventually sold off all GRO tokens into the market once GRO/PWRD bonds were no longer available.

  • This could have been driven by a combination of factors such as
    (1) high gas costs relative to bond value at ~6.7%
    (2) decrease in token price over the course of bonding period
    (3) holiday season leading to lower natural bonding, which paved way to extensive bot activities

  • This prompted questions on whether Gro DAO should re-evaluate the allocation approved under Vote 008 before we received the bond analytics data below; and if the DAO decides to continue this program, what changes should be put in place to improve bond dynamics

Bond statistics
Note that the below prices were taken at the time of transactions instead of current value.

  • In total 35,200 GRO tokens were allocated for GRO/PWRD bond – among which 1,712 GRO tokens were paid to OlympusDAO treasury as bond origination fees, 1.16 GRO remains in the bond treasury, and the rest distributed through bonding (1,050 GRO were not yet claimed).

  • In return, Gro received 33,423 GRO/PWRD pool tokens that were priced at a total of $204,474 at the time of transactions.

  • Total discounts received by bond participants totaled $40.5K at the time of transactions for an average of 19.8%; OlympusDAO team suggested this is above the average discount observed across all bonds at about 10%.

Participants

  • 34 bonding transactions took place between 19th November and 28th December 2021.

  • Of the 34 transactions, there were 19 unique wallets that participated in bonding.

  • With further analysis, a significant number of wallets are shown to be transacting with each other. This narrows down the individual entities that participated in bonding to 6 groups of wallets. Majority of the bonded values was driven by a bot network of 11 wallets contributing to 21 transactions.

  • The identified bot network (Group 1) has contributed 57% of bond value, followed by an individual DAO member (Group 2) who contributed 22%. All GRO tokens obtained by these wallets were eventually sold in the market, though part of them were initially retained and used for subsequent bonding.
    Screen Shot 2022-01-31 at 10.14.11 PM

Bond size & value

  • 76% of all bonding activities bonded at above 90% of maximum bond size (1,162 bonds), reflecting a desire to bond at or beyond the maximum bond size.
    Screen Shot 2022-01-31 at 9.42.44 PM

  • Bond value averaged at $6,000 and decreased over time as token price dropped over the course of the bonding period, even though the bond size remains close to maximum bond size.
    Screen Shot 2022-01-31 at 9.42.52 PM

  • By comparison, gas cost required for bonding estimated to be at ~$400 i.e. 6.7% of average bond value. This likely has helped drive the higher-than-average discount.


Suggestions by OlympusDAO
We discussed the analysis outcome with our counterparts in the OlympusDAO team, who provided us with the following suggestions.

  • Increasing co-marketing efforts
  • Featuring Olympus Pro bond more prominent in community channels on Discord (e.g., Bond Support Channel with Olympus Rep answering questions) and on dApp to drive organic demand
  • Reviewing the bond vesting period (currently at 14 days)
  • Reviewing overall GRO emission and bringing it more in line with APY implied by bond discounts

DAO input required

  1. Should Gro DAO re-evaluate the allocation approved under Vote 008?

  2. If the DAO decides to continue this program, what changes should be put in place to improve bond dynamics?

2 Likes

@joyce thank you joyce for the data

It seems that in summary the current olympus pro bond program for Gro runs heavily into mercenary capital (or just in general “risk-free” arbitrage). Considering the low amount of volume for $GRO (just eye-ing on Coingecko data), a trader may naturally take the chance to get a risk-free trade between the $GRO bond price vs market price. I suspect this also contributes to the high discount for $GRO bond that we see

Generally my opinion trends towards “governance tokens’ price don’t really mean anything”, but this time I would say it does matter. There’s the publicity optics aspect to it, but more importantly it is about the effective use of the available funds the community has at its disposal.

It is likely a bit difficult to disentangle the cause and effect of Gro’s price action with regards to the sales from bonded $GRO, but I would reckon it only contributes a small chunk (relatively) to the downtrend price action considering the value of the bonded $GRO and the amount bonded

I see several path forward for the bond program:

  1. Continue as is accepting the situation. But I would be against this option personally

  2. Halt the Olympus pro bond program for the time being and reinstate it when we can deploy it more strategically. Possible improvements:

    • Provide Olympus pro bond in a different and cheaper chain, to make bonding more appealing for less large holders. Olympus bonds are available in FTM/Avalanche/Arbitrum. I would be inclined to have it in Arbitrum as a road towards having a stake in an Eth L2 solution
    • Have a more common LP pairing e.g GRO/USDC to make the process easier/more understandable for bonders. We can always choose to withdraw the liquidity if needed and use each side of the asset for other purposes
    • Consider single-sided Vault/PWRD as a bondable asset to help increase TVL and provide a floor TVL, but potentially at the cost of somewhat reducing GRO price. This approach follows the thinking of $GRO as a marketing fund being its primary functionality. The hope is that we can create a fee revenue through the product TVL in the longer run
    • Make the bond payout a different token, potentially a tokenized vesting GRO token e.g veGRO (or something similar). The token can be redeemed for a vesting position, and potentially perhaps with additional bonuses such as increased APY performance on the products
  3. Suspend the Olympus pro bond program indefinitely

I don’t think we need Olympus pro bond program in the near immediate (3 - 5 months) future as a way to create more liquidity. And though some vesting position will end nearing the end of the year (October onwards), we can still provision liquidity through some kind of liquidity lending service (like Fei-Ondo), or borrowing an asset from another DAO such as Olympus’s Debtor functionality which is still behind a whitelist right now. PoL/PCV can be very powerful as a protocol further expands but for a micro-cap token like $GRO it seems so far from this anecdotal data, it is not an immediate win.

Overall, I would choose to suspend the Olympus pro bond program for now with a plan to iterate on a more attractive bonding program in the future