TAP-21 Pilot Clearing House Deposits

Voting ended about 3 years agoSucceeded

Summary

Pilot deposit of no more than $500,000 DAI each into Vendor Finance and MYSO Finance Clearing House facilities pending several pre-conditions:

Vendor Finance will deploy their system to mainnet & provide a code review with OlympusDAO engineering teams

MYSO Finance will deploy their system to mainnet & provide a code review with OlympusDAO engineering teams

Cooler Loans is out of scope of this governance proposal. We will await a follow-up directly from Zeus regarding the audit before moving forward with a proposal.

Motivation

Per Zeus:

Lending has historically been a sore spot for Olympus. Rari Fuse stands out as the glaring example — Ohmies were plagued with unreasonably high interest rates and expensive & restrictive liquidation proceedings. This is especially nonsensical in the current environment, where OHM trades at/near/below backing and offers significantly more liquidity relative to supply than other, more lent to tokens like ETH, CRV, and others. Even now, we see little to no available liquidity on the two primary options (Vesta and Fraxlend), and high interest rates on Fraxlend. We can do better.

The Clearing House facility is a novel method for our treasury to deploy capital in an efficient way. The two groups below propose different approaches to similar problems:

https://forum.olympusdao.finance/d/1821-rfc-clearing-house-partnership-with-vendor-finance

https://forum.olympusdao.finance/d/1905-rfc-clearing-house-partnership-with-myso-finance

Per Vendor:

    We have been working with UMAMI Finance to polish this concept and we are familiar with many edge-cases that are not immediately obvious. Umami DAO has been lending with Vendor out of their treasury and has made a consistent 40% APR. Currently they are lending $100k and taking a measured approach to lending. So far they have been satisfied with the service and we greatly value them as our partner. Please see their treasury report to learn more: https://blog.umami.finance/umami-finance-treasury-update-december-2022/

Per MYSO:

We’ve added a script to backtest various pool parameterizations, which is open source and can be found here: https://github.com/mysofinance/notebooks/blob/main/olympus-dao-myso_v_1_1-backtest/olympus-dao-myso_v_1_1-simulation.ipynb For the above mentioned initial pool parameterization, the pool would’ve returned a RoI of 7.8% for the backtesting period from 2022-03-01 to 2023-01-16. The backtest was run with similar assumptions to the ones found in the previous mentioned alternative proposals. The MYSO Finance team is happy to provide additonal backtests on demand.

Proposal

Pilot deposit of no more than $500,000 DAI each into Vendor Finance and MYSO Finance Clearing House facilities pending several pre-conditions:

Vendor Finance will provide:
    Mainnet deployment
    Code review with OlympusDAO engineering

MYSO Finance will provide:

    Mainnet deployment

    Code review with OlympusDAO engineering

Polling Period

Poll will begin now and end in 5 days.

Poll

Approve $500k pilot deposit into each protocol

Approve $500k to Vendor Finance (mainnet)

Approve $500k to MYSO Finance

Do not approve

Off-Chain Vote

Approve pilot to each protocol

70.04K OHM97.6%

Approve Vendor Finance (mainnet)

1.54K OHM2.2%

Approve MYSO Finance

182.18 OHM0.3%

Do not approve

2.32 OHM0%

Download mobile app to vote

Discussion

TAP-21 Pilot Clearing House Deposits

Timeline

Feb 10, 2023Proposal created

Feb 10, 2023Proposal vote started

Feb 14, 2023Proposal vote ended

Oct 26, 2023Proposal updated

Vendor Finance will deploy their system to mainnet & provide a code review with OlympusDAO engineering teams MYSO Finance will deploy their system to mainnet & provide a code review with OlympusDAO engineering teams Cooler Loans is out of scope of this governance proposal. We will await a follow-up directly from Zeus regarding the audit before moving forward with a proposal.

Lending has historically been a sore spot for Olympus. Rari Fuse stands out as the glaring example — Ohmies were plagued with unreasonably high interest rates and expensive & restrictive liquidation proceedings. This is especially nonsensical in the current environment, where OHM trades at/near/below backing and offers significantly more liquidity relative to supply than other, more lent to tokens like ETH, CRV, and others. Even now, we see little to no available liquidity on the two primary options (Vesta and Fraxlend), and high interest rates on Fraxlend. We can do better.

We have been working with UMAMI Finance to polish this concept and we are familiar with many edge-cases that are not immediately obvious. Umami DAO has been lending with Vendor out of their treasury and has made a consistent 40% APR. Currently they are lending $100k and taking a measured approach to lending. So far they have been satisfied with the service and we greatly value them as our partner. Please see their treasury report to learn more: https://blog.umami.finance/umami-finance-treasury-update-december-2022/

We’ve added a script to backtest various pool parameterizations, which is open source and can be found here: https://github.com/mysofinance/notebooks/blob/main/olympus-dao-myso_v_1_1-backtest/olympus-dao-myso_v_1_1-simulation.ipynb For the above mentioned initial pool parameterization, the pool would’ve returned a RoI of 7.8% for the backtesting period from 2022-03-01 to 2023-01-16. The backtest was run with similar assumptions to the ones found in the previous mentioned alternative proposals. The MYSO Finance team is happy to provide additonal backtests on demand.