FIP-79: Olympus DAO <> Fei Partnership

Hi All,
I’m Balotelli, a DAO contributor from Olympus & big fan of Fei Protocol.

Summary

Execute a DAO swap with Olympus DAO for $2m OHM at a 30-day time-weighted average price.

Motivation

Rari was one of the first protocols to partner with Olympus a few months ago, through the integration of sOHM/gOHM on Fuse. Since then, Ohmies have represented one of the largest, if not the largest, portion of Fuse’ user base.

Rari recently merged with Fei protocol and now forms one of the biggest protocols in the ecosystem. We want to further align our two communities as we believe there are many positive sum outcomes to be had from formalizing a partnership.

Proposal

  • Execute a $2M TRIBE-OHM DAO swap at a 30-day-time-weighted average price.

  • Olympus to put up a proposal to take in FEI as a Treasury reserve asset, capped at a maximum of 10% of FEI circulating supply. As always, these bonds would be managed independently by Olympus Policy team.

  • Fei protocol to buy FEI bonds up to the point where OHM represents 1% of the Protocol-Controlled Value. Note that ,if needed, the 1% cap could be further increased in the future through a governance vote.

  • Both the Olympus exposure to FEI and the Fei exposure to OHM are represented as maximums. The expectation could be around proportionality up to the max i.e. 0.5% OHM in Fei PCV ~= 5% FEI in Olympus Treasury

  • Olympus Treasury to allocate funds in Fuse while fully respecting Treasury allocation guidelines approved by the community (OIP-73).

  • Olympus to explore new use cases & yield opportunities enabled by Turbo

    • Ohmies would, for example, have access to lower risk opportunities of generating passive yields on their holdings compared to what is currently available on the market.

Links :
Olympus DAO: https://www.olympusdao.finance/
OIP-78 on Olympus DAO Forum: https://forum.olympusdao.finance/d/1049-oip-78-execute-2m-dao-swap-with-fei-protocol
Request For Comments on Olympus DAO Forum: Request For Comment: Execute DAO Swap with Fei Protocol - OlympusDAOForum

  • Pursue the DAO Swap & Acquire $OHM up to a maximum of 1% of FEI PCV
  • Only pursue the Dao Swap
  • Do not pursue the DAO Swap

0 voters

1 Like

From my understanding, all Olympus management is not made through trustless smartcontracts & a governor, but everything is handled by a multisig. Do we know who are the 7 signers ? I think it’s important to know, because in effect these would be the ones we’re doing an OTC with & giving claims on the PCV to.

Can we get an insight on how these treasury assets will likely be allocated ? Releasing millions of FEI into circulation is not something we should do mindlessly now, especially if our DAO don’t control them, and it would be nice to know if these are expected to be placed in AMMs or lending markets or held idle etc.

2M TRIBE + 7M FEI would be the largest OTC made by our DAO to date. I would be more comfortable with a smaller amount (if any).

Could you tell us more about OIP-73 ?

It would be very cool if gOHM was a whitelisted Turbo collateral, and your DAO could offer FEI to leverage on your tokens in your Fuse pool.

Overall, I’m not in favor of an OTC or bonding FEI. It is speculation whether OHM will appreciate or depreciate over time, so we don’t know if the collateral we get to cover this new circulating FEI will be enough, or if we’ll have to spend PCV to cover for it. We don’t know who we are transacting with, and it
is unclear what synergies between our protocols can look like. I think we should reserve treasury TRIBE OTCs for long term/strategic partnerships/merges, not for memes. If the goal on the TRIBE side is decentralization & enlarging the holder base, we should encourage market buys on the IDO funds, not evenly diluting all the holder base by issuing tokens out of the treasury.

ps : will Olympus provide the smart contracts to bond FEI and stake OHM etc ? We don’t yolo with a multisig so any interaction with the PCV require dev time to write contracts, test, propose, etc. And tbh I’m not willing to do it.

1 Like

Hi @Eswak ,

  1. Olympus is currently working towards implementing on-chain governance which was one of the main reasons for migrating to Olympus V2 a few weeks ago.

  2. Olympus would be introducing FEI bonds where Treasury would be exchanging discounted OHM for FEI. This step is independent of Fei Protocol and would actually provide a supply sink of up to 10% of the user-fei circulating supply.

  3. Technically the OTC would only be for the OHM-Tribe swap. If the swap went through, FEI Protocol, would already have $2M worth of OHM in its PCV. For the remainder, Fei Protocol could acquire $OHM trustlessly through regular Olympus bonds. Also, note that for Fei to accumulate the maximum amount, it means Olympus would have also taken in 10% of user-fei circulating supply in couterpart.

  4. OIP-73, outlines allocation limits for the Olympus Treasury. As an example, the maximum amount of reserve assets that could be deposited by Olympus on Fuse would be limited to 25% of excess reserves (close to $50M today). Again, this is the upper limit, deposited amounts would be managed by Olympus’ Treasury team.

  5. Yes agreed, this would definitely be an interesting use case for Turbo.

  6. I personally think the opposite. As mentioned, a big portion of your main product are Ohmies and I am sure our community would also represent a large proportion of Turbo’s users. Also, do you not see value in having new organic demand for FEI ? up to 10% of your circulating supply? I believe one of Fei protocol’s main goal is to promote the adoption of its stablecoin which this proposal seems to be in line with.

Lastly, I am not sure I understand your question. Buying bonds or staking OHM does not require any interaction with Olympus Treasury multisig… Anyways, let me know if you have any other questions on OlympusDAO as you seem to have some incomprehensions about our protocol. Appreciate the feedback nonetheless.

I think this is shortsighted, there are a lot of great potential strategic opportunities. Olympus commands a huge treasury and a great community. Their mechanisms have weathered huge amounts of stress and operated successfully without injuring the core protocol or leaving bad debt in Fuse.

By bonding FEI into the treasury, they would be increasing FEI demand in exchange for OHM. 10% of their treasury is over 50m FEI, this is a real benefit to Fei protocol as it would receive more PCV to offset that FEI demand. Olympus is 20% of the LUSD supply and having them do the same with FEI would be pretty advantageous.

Likewise the majority of Fuse platform revenue has gone through pool 6 and 18 which are largely OHM borrowers. OHM is backed by hard reserve assets and it is trading very close to RFV. APRs have compressed significantly and will continue to do so as they transition to bond-first mechanisms.

To me, this proposal is a mutual bet on growth, with some reasonably sized give and take on each side. Most importantly, it is incentive alignment among two of the largest treasuries in DeFi, and I am in favor.

I think its important to create space for this conversation between the communities beyond just the forum, and would love to be a part of some kind of community call or AMA.

See my post on Olympus forum: General - OlympusDAOForum

3 Likes

I think this is an excellent proposal and I am excited to see the collaboration between Fei and Olympus.

That said, I am a significant stakeholder in both networks so I will not be voting/commenting further on this proposal as I am keen on deferring completely to the community’s judgement.

There are three separate concerns in this proposal.

  1. TRIBE-OHM treasury swap
  2. FEI being an asset that can be used for buying OHM bonds
  3. FEI Protocol buying OHM bonds

Treasury Swap
The TRIBE OHM treasury swap should happen after we have worked together for some time and we have decided there is a good long term partnership and we would like to align interests more closely.

OHM FEI Bonds
I’m totally in support of creating OHM bonds denominated in FEI as it will create a demand sink for user circulating FEI and encourage new FEI creation, thus increasing the PCV. With current OHM mechanics, this FEI cannot re-enter circulation unless the protocol deposits it into a lending market to earn yield.

FEI Protocol Buying OHM Bonds
If the treasury swap is done, in the short to medium term it should preclude FEI Protocol from buying OHM bonds as we would have a decent amount of OHM exposure in the PCV. However, if the treasury swap is not executed, then I would be in support of buying 2m FEI worth of OHM through the FEI OHM bonds as long as most of that FEI cannot re-enter circulation even in the form of a debt to Olympus.

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Onboarding up to 10% of the FEI supply into OlympusDAO’s treasury and encouraging allocation of Olympus treasury assets in Fuse will bring a significant TVL and revenue boost to the protocol.

Agreeing on an approximate ratio between % of Tribe PCV allocated to OHM and the portion of the FEI supply in the Olympus treasury seems like a sensible approach. The example ratio given works out to ~$3.65m OHM in the Fei PCV, and ~$11.2m FEI in the OlympusDAO Treasury, as well as potential treasury deposits of $100m+ in Olympus PCV into Fuse. This sounds like an excellent deal for the Tribe.

This proposal makes a lot of sense to me and I appreciate all of the thought that went into this @Balotelli45!

Fuse has supported Olympus since the very beginning, and I have always been keen to explore opportunities to bring our DAOs closer. There are multiple aspects of this proposal that excite me and overall I’m stoked for the potential of FEI as a treasury asset, spreading the usage of the decentralized stablecoin even further throughout the ecosystem.

I see numerous synergies between Olympus and the Tribe and have long advocated internally for greater collaboration and incentive alignment. I believe the terms of this agreement are a strong starting point for a much deeper partnership.

The initial treasury swap should serve as a starting point to align incentives. Fei bonds will also directly benefit the Tribe DAO immediately upon launch. I believe the Tribe can return the favor and add value to the Olympus ecosystem as well as we have a number of synergies. I hope to continue these discussions on the forums and perhaps even a community call or Twitter spaces and eventually welcome Olympus as a formal member of the Tribe.

overall Im in favor

can you expand a bit on how this FEI and TRIBE would most likely be used? Im looking at OIP 73 and Im not exactly sure where FEI and TRIBE would fit in OIP-73: Treasury Framework - OlympusDAOForum

after ohm lowered the rewards i’m only approve…because their use grows in the defi space and the interest rate becomes less risky

Will send to last call after the community call tomorrow (2-23) at 11:30 am PT!

I’m happy that there is an appetite and traction for a Fei-Ohm partnership now after 2 unsuccessful tries last year. A Fei bond for Olympus is long overdue!

suggested edits from community call. If everyone is aligned, moving to 48h last call!

https://snapshot.org/#/fei.eth/proposal/0x8fc10a0d66829e7e78b41a72d542adf7720f92b747a083400d77656744169907

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ran numbers for the swap using per-block values of the TRIBE and OHMv2 chainlink oracles

block range: [14245805, 14336127]
14 day mean price: 74.59844 TRIBE/OHM
Current TRIBE Price: $0.554167
→ $2M = 3,609,020.39 TRIBE
→ DAO swap = 3,609,020.39 TRIBE for 48,379.30 OHM

updated numbers denominated in gOHM instead of OHMv2, converted using the per-block index value on the gOHM contract:

block range: [14245805, 14336127]
14 day TWAP price: 6,638.51859 TRIBE/gOHM
Current TRIBE Price: $0.554167
→ $2M = 3,609,020.39 TRIBE
→ DAO swap = 3,609,020.39 TRIBE for 543.65 gOHM

looks like there was a slight miscommunication, TRIBE snapshotted 14 days and OHM snapshotted 30 days. to reconcile, members of both communities have proposed they would be happy with a 30 day TWAP ending today:

block range: [14207339, 14400649]
30 day TWAP price: 6,493.59464 TRIBE/gOHM
Current TRIBE Price: $0.533624
→ $2M = 3,747,957.36 TRIBE
→ DAO swap = 3,747,957.36 TRIBE for 577.18 gOHM

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If this works for everyone, the proposal can go live on-chain tomorrow!

Confirming this works on OHM side. Lets ride.

2 Likes