OIP-114 Tantalus - Testing OHM Bonds

Summary

Grant Policy authority to:

• Deploy test of OHM Bonds via Gnosis Auction and Olympus Bonds to collect market data and community feedback
• Source the OHM token incentives from OHM captured by Inverse Bonds activities to prevent additional emissions
• Determine the parameters of the bond offerings: auction method, maturity lengths, date issued, capacity and max payouts

Background

This proposal aims to gather market data on the demand for OHM bonds as we design and transition to a bond centric future for the Olympus protocol. These ideas are established in more depth in “Exploring a Bond Centric Future” and “Olympus12”. The proposal also references Inverse Bonds from OIP-94 as the source of OHM tokens to be used for incentives of these bond offerings. This is to prevent additional emissions while undergoing bond testing.

Motivation

The goal will be to understand the market demand for OHM bonds and analyze the relationship between discount rate and bond maturity by utilizing two different maturity lengths. Further analysis will also compare effects of net flows during unlocking events and compare observed discount rates against historical data. This testing and analysis will be important data to inform the development of the bond markets and the transition to a bond-centric Olympus protocol.

Implementation

Test the auction methodology, using Olympus’s sequential dutch auctions and Gnosis auctions, to offer two bond maturities. Each bond offering will be tested with the different auction types. Therefore there will be two bonds with a maturity for 7 days and two with a maturity for 30 days. The allotted OHM for this test would be 40,000 OHM. Each bond will have a capacity of 10,000 OHM, which is approximately equivalent to the amount currently being bonded through Inverse Bonds daily and around 50% of the daily staking inflation. The bond tests will be divided into two rounds. Each testing the different maturities 7 day vs 30 day and using a different auction technique. There will be a delay between Round 1 and Round 2 to ensure demand has refreshed.

*Note: The different auction types have different technical implementations. The Sequential Dutch Auction will have fixed term and the Gnosis Batch Auction will have fixed expiry.

Round 1

Gnosis Auction: 14 day @ 10,000 OHM

Gnosis Auction: 28 day @ 10,000 OHM

Round 2: 1 to 4 weeks later

Olympus Auction: 14 day @ 10,000 OHM

Olympus Auction: 28 day @ 10,000 OHM

This proposal aims to receive authorization for a Policy bond testing framework so that additional maturities, capacities or auction methodologies can be tested after the conclusion and review of this initial bond test offering.

Proposal

Authorize the Policy team to :

1. Deploy test of OHM Bonds to collect market data and community feedback

2. Source the OHM token incentives from OHM captured by Inverse Bonds activities to prevent additional emissions

3. Determine the parameters of the bond offerings: auction method, maturity lengths, capacity and max payouts