Summary

Launch a Boosted Liquidity Vault for the LUSD/OHM pool on Balancer with a maximum vault capacity of $2.5m in LUSD. To match this, approve the minting of up to $2.5m in OHM for this vault in order for both assets to be deployed in a 50/50 liquidity pool.

Background

The Boosted Liquidity Vault (BLV) leverages Olympus’ competitive advantages (monetary policy flexibility and treasury strength) to mint OHM into liquidity pools with select high quality assets. LPs bring an asset (e.g., stablecoin, LSD) into newly developed vaults and the Olympus treasury mints OHM in equal value (for 50/50 pools) to match and create a complete LP position.

LPs benefit from boosted liquidity mining opportunities and partner protocols are able to more efficiently drive liquidity mining programs and deepen supplemental liquidity for their tokens. Olympus benefits from LPs providing counter asset liquidity, enhancing OHM’s liquidity depth, which enables greater utility and stability. It also has the potential to unwind part of the POL and use the reserve assets in other use cases. Furthermore, the BLV can be a powerful tool for partnerships. BLV is not intended to be utilized for any and all assets but rather select high-quality assets with which an OHM pairing would be beneficial.

The first BLV was launched in cooperation with Lido (wstETH/OHM) and has seen good traction, reaching an LP size of >$3m with an incentivization rate of ~10% for depositors.

Vault Details

The LUSD/OHM vault will be the second deployment of a BLV. As third parties add LUSD into the vault, the protocol will mint OHM to match this and deploy it into the liquidity pool and stake it to receive incentives.

These incentives will be in the form of BAL and AURA rewards and both Liquity and Olympus will vote with vlAURA to direct rewards to the pool. The expectation is that this pool will see significant arbitrage volume between other LUSD pools (where LUSD is frequently trading over peg) and the existing deep OHM pools against DAI and ETH.

All the reward tokens earned through this vault will be directed to LUSD depositors. The protocol itself will not receive these tokens, with the exception of trading fees which are accrued inside the LP token itself. The target APY range of the vault is 5%-10%.

The proposed vault will launch with the following parameters:

• Maximum capacity: $2.5m in LUSD provided by third parties & $2.5m in OHM minted by the protocol.
• Pool: 50/50 LUSD/OHM on Balancer
• Incentivization strategy: Aura staking
• Oracle: Chainlink
• Fee: 5%

Note that the maximum mint capacity is perpetual and can be utilized by the contracts until the vault closes and/or a governance vote changes these parameters.