Vote 008: Increasing Olympus Pro bond allocation

DAO Treasury
#1

This post is for input ahead of a proposed Snapshot vote using GRO (this will include vesting GRO and locked GRO).

After receiving community feedback here and making any necessary amendments, we aim to propose a formal vote to the DAO on https://vote.gro.xyz

BACKGROUND

GRO/PWRD Olympus Pro bond launched on 19th November 2021 following Vote 4. The total bonded value by 5pm UTC on 2nd December 2021 was at $66.9K which is lower than other bonds released in the same week.

Gro DAO members have provided feedback that the current maximum bond size of 1,154 GRO ($7,974 at the time of writing) limits the bond demand as gas costs become a significant portion under this cap (>4%). Under the Olympus bond design, a wallet could only bond up until the maximum bond size or risk lengthening the 14-day vesting schedule. Increasing the maximum bond size would thus increase the capital efficiency of this bond and make it more appealing to DAO members. This would in turn help Gro DAO deepen GRO/PWRD liquidity more effectively.

PROPOSAL TO INCREASE BOND ALLOCATION TO $500K GRO/month

Gro proposes that the DAO increases allocation from $250K/month to $500K/month for the GRO/PWRD Olympus Pro bond. This would effectively more than double the maximum bond size from 1,154 GRO to 2,620 GRO ($15,380).

  • Olympus Pro is a well-received liquidity management program with 25 partner protocols on Ethereum, Fantom, and Avalanche since its September launch.
  • While the gas cost to bond would remain the same to the user, a larger maximum bond size would mean the gas cost would be a lower proportion of capital used for bonding.
  • $500K/month would be in line with fellow Cohort 3 participants’ monthly allocation of $448K, $520K, and $550K. There is one protocol that allocated $1.2M/month to the program which would be advised to adjust downward.
  • An additional $250K GRO represents a very small increase in circulating supply (<1%) and a even smaller portion of GRO allocated to the treasury (<0.3%); in the event that all bondholders sell their GRO tokens obtained in this program after the 14-day vesting period, it would have limited impact to GRO holders.

More details about the GRO/PWRD Olympus Pro bond (same as what was presented in Vote 4):

  • GRO/PWRD is a new Uniswap v2 pool where there are no liquidity mining rewards offered at the moment; this provides a clean read of the bond’s performance in drawing in additional liquidity in the absence of GRO incentives.
  • LP tokens obtained through this program will remain in the treasury to generate trading fee income while providing liquidity to the market.
  • Bond price will be determined by market demand; higher demand for the bonds will increase the bond price and vice versa.
  • The program duration is flexible; if the result is unfavourable (e.g., limited market appetite), Gro DAO can sunset the program by not renewing the allocation to the bond’s custom treasury contract.
  • OlympusDAO will get 3.3% of total bonded value in Gro DAO tokens in return for providing the bond instruments and marketplace; as OlympusDAO has “skin in the game” through holding our governance tokens, it will have higher incentives to collaborate with us in growing Gro.

Summary

Increasing allocation to the Olympus Pro program would enable more effective bonding to deepen GRO liquidity and improve the experience for Gro DAO members.

Please add your suggestions, objections and support in the comments below :purple_heart:

REFERENCE

Olympus Pro - introduction article

Olympus Pro - documentation

3 Likes
Olympus Pro - first $250K GRO allocation analysis
#2

Yes for me! For others reading, the main concern was the gas efficiency of performing these bonds. Last time members were trying to bond the gas fees in total to get PWRD and GRO, provide LP, and then bond on Olympus Pro is around $400 - $800. This hefty gas ultimately increased the cost of bonding and therefore reducing user’s profits. Increasing the bond allocation would help make bonding more attractive due to the increased capital efficiency for gas usage

2 Likes
#3

Same for me.

Also in the future we could think of an easier way of bonding. The advantage with Ohm bonding back in the time was that you only needed DAI, there was no need to hold a second pair OR to have it in a LP. These additional steps make it very unattractive to bond.

On the otherside, I see an use-case for PWRD in the Ohm bonding proces. Right now is it DAI only. But why shouldnt Ohmies not be able to also use PWRD in the bonding proces as this will lower the risk for the Ohm treasury.

2 Likes
#4

I think all Olympus Pro partners are using LP deposits. It’s mainly because to attract liquidity into each protocol’s respective treasury so that the protocol can accrue protocol owned liquidity and eventually phase out liquidity renting. That said, perhaps in the future as things grow we can also have protocol controlled funds :slight_smile:

Won’t it be interesting if at certain strategic times for the Gro treasury to hold Vault so that the risk that Vault users take on can be directly managed through the Gro treasury depositing/withdrawing/bonding Vault causing decreasing/increasing utilisation ratio

2 Likes