Determine % of OUSD and OETH Performance Fees Used for OGV Buybacks

SUMMARY

This proposes that both OUSD and OETH should contribute the same percentage of their performance fees to OGV buybacks and provides options to vote on what the percentage should be.

BACKGROUND

OUSD and OETH were designed to accrue value for the Origin DeFi DAO (OGV stakers).

Both tokens have a 20% performance fee dedicated to this purpose. This proposal maintains the 20% performance fee which is in line with market rates. (Yearn, for example, is currently charging 20% performance fees on their USDT, USDC, and DAI vaults). Currently, however, the proceeds from performance fees are being used differently across OUSD and OETH.

OUSD’s performance fees are being split 50-50 across the following:

1. 50% used to purchase ”flywheel tokens” such as CVX (CVX tokens locked as vlCVX are used to vote for greater rewards emissions on Origin’s Curve pools).
2. 50% used to buy OGV on the open market and redistribute it in the form of increased rewards for OGV stakers. Rewards are disproportionately distributed to those who are locked up the longest.

Note that both uses of performance fees have merit. Purchasing flywheel tokens is an important investment in future sustainable yield via the AMO strategy and helps ensure exit liquidity for OETH. OGV buybacks, on the other hand, drive value to OGV holders, thus increasing the value of OGV and making our bribes and other incentive programs more efficient.

Unlike OUSD, OETH is currently contributing 100% of its performance fees to purchasing flywheel tokens (CVX) with 0% allocated to OGV buybacks. This decision was made to invest in long-term sustainable yield for OETH when it was new to market. Frax, for example, has been building a war chest of flywheel tokens for a long time and we have a lot of catching up to do to stay competitive.

Now, there is an opportunity to align the strategies of OUSD and OETH by contributing an equal % of performance fees to buying back OGV and distributing rewards to OGV stakers.

This will not only help minimize confusion but also ensure both OUSD and OETH token holders have equal “skin in the game” with regard to the Origin DeFi DAO.

Note that OETH TVL is significantly higher than that of OUSD. For the most recent round of buybacks, the OUSD total performance fee was ~$4,900 while the OETH total performance fee was $27,300. So if OETH were to contribute even 25% of performance fees to buybacks, it would increase the rewards for OGV staking significantly (from$2,450 to ~$16,100). Given the inherent tradeoffs at play, this would come at the expense of buying flywheel tokens aimed at long-term yield.

OVERVIEW

If approved, this proposal would signal the community's support for the following next steps:

Update the allocation of OETH’s performance fees, with X% going to accumulating flywheel tokens and Y% going OGV buybacks Update the allocation of OUSD’s performance fees, with X% going to accumulating flywheel tokens and Y% going OGV buybacks ^X and Y will be consistent for both OUSD and OETH.

Note that the strategists have flexibility when it comes to accumulating flywheel tokens, so they may opt to bribe instead of purchasing CVX or start accumulating another flywheel token such as AURA.

Please rank the following options in your order of preference, indicating the percentage (X) of performance fees that should go to purchasing flywheel tokens versus the percentage (Y) that should be used for OGV buybacks for both OUSD & OETH.

1. 0% flywheel tokens / 100% OGV buybacks
2. 25% flywheel tokens / 75% OGV buybacks
3. 50% flywheel tokens / 50% OGV buybacks
4. 75% flywheel tokens / 25% OGV buybacks
5. 100% flywheel tokens / 0% OGV buybacks
6. No change

This proposal does not call for a ramp-up period. The first potential buyback/flywheel token purchase following the passage of the proposal and any smart contract implementation would reflect the selected percentages. Any buybacks would align with the current OUSD buybacks which occur approximately every 2 weeks ahead of the Convex voting deadline.

IMPLEMENTATION

If applicable, implement a buyback contract for OETH (similar to the one we have for OUSD).

Send X% of the performance fee funds to the OETH and OUSD Strategist multi-sig to procure flywheel tokens before swapping the remaining Y% to OGV as a reward for stakers.