Squid/OHM LP Proposal

Migrate 33% of SQUID/ETH liquidity to SQUID/OHM

In an effort to further improve SquidDAO’s fundamentals, as well as strengthen our partnership with OlympusDAO, we are proposing that we migrate 33% of our liquidity to SQUID/OHM.

The basic idea is the following:

• remove 33% of the SQUID/ETH Sushiwap liquidity
• move the ETH to the treasury
• borrow OHM matching the amount of removed ETH from OlympusDAO
• pair it with SQUID from the removed liquidity to create a SQUID/OHM pool

The end result is 33% of the current liquidity will be SQUID/OHM and 67% – in SQUID/ETH. While our treasury value and runway get boosted.

The exact mechanics of the liquidity swap will be outlined separately following an approval of thai proposal from SquidDAO and a corresponding approval of the loan and its terms from OlympusDAO.

In order to continue thickening out liquidity as the protocol grows, we will be accepting both SQUID/OHM and SQUID/ETH bonds. The amount of SQUID/OHM to be minted against these bonds will be a conservative % to be decided by a separate Snapshot vote, should this proposal be approved. The policy team will be tasked with managing the capacity of SQUID/ETH and SQUID/OHM bonds.

Loan Terms & Repayment Olympus will supply the OHM required to match our SQUID pool. This will be structured as a rev share with an expiration. The total value of the loan will be based on a spot price of OHM when the pool is formed.

We will repay/share revenue with Olympus by taking a 3.3% of the new bonding fees from the OHM bond and SQUID/OHM bond.

Each payment will consist of a blend of assets (33% SQUID, 33% ETH, 33% OHM or gOHM).

The loan will expire and be due for payment in 5 years if we have not repaid the entire balance prior to that.

We will sunset the rev share on bonds after 5 yrs or after we have paid 2x the balance. Whichever comes first.

Pros:

• Strengthens our partnership with OlympusDAO
• Gives our treasury a serious ETH injection -- we currently have over 3200 ETH sitting in the LP, 33% of which will be migrated to our treasury and can be deployed for additional yield farming strategies
• Increases our RFV because the ETH is no longer discounted as it is while sitting in the LP
• Improves all other metrics derived from RFV, such as runway and backing of circulating SQUID
• Arbitrage opportunities b/n the two pools increase our LP fees