Olympus DAO

Summary: Expand beyond Layer 1 Ethereum by deploying Olympus contracts and a pool to Arbitrum.

Background: Arbitrum is the first Ethereum Layer 2 to go live. It offers far lower fees than Layer 1 while featuring the same security. Olympus is currently only available on Layer 1, and gas fees have become extremely prohibitive in recent weeks with NFT mania, EIP-1559 and a rising ETH price.

Abstract: Deployment on Arbitrum would look like the following:

We utilize the 550 WETH (market value ~$1.7m) and equal value OHM to create a $3.4m OHM-WETH liquidity pool on Sushiswap Arbitrum. We create a single bond type, which offers OHM in exchange for OHM-WETH liquidity. We create a new Arbitrum staking contract, which receives rewards based on bond sales. To expand on point 1:

Using the WETH in the treasury currently allows us to bootstrap a decent-sized initial pool without affecting treasury RFV. This would reset the clock on WETH accumulation as laid out in OIP-15. To expand on point 2:

Bond sales, and staking rewards, would be pre-funded from Layer 1. The Arbitrum treasury would hold an inventory of OHM, which it can use for these two purposes. OHM would not be minted on Layer 2. To expand on point 3:

Arbitrum would have its own staking contract. The yield on Arbitrum sOHM would differ from yields on Ethereum sOHM. Rewards on arbitrum would be a set multiple of bond sales. For example, lets say the policy-governed Staking Multiple is 2x, and someone executes a bond which will payout 10 OHM. 20 OHM (10 * 2x) would go to staking, to be included in the next epoch’s rebase. This will create a variable rate staking yield, unlike Layer 1’s fixed rate yield (rebases on Ethereum are consistent regardless of bond subscription). This will create a stronger alignment of incentives between stakers and the treasury, since stakers receive more rewards when more bonds are executed. Please note that variable rate is experimental, and policy may discontinue it in favor of fixed rate (like we have now) at any time. Its’ success creates a lot of opportunities as we expand to more chains, but we need to first observe whether theory matches reality. This might sound complicated. As an end user, here’s what you need to know:

UI/UX would be the same as on Layer 1. A single bond type would be available – OHM-WETH. Staking would work the same, but rebases would be more variable. They will likely be higher than Layer 1 staking at some times, and lower at other times. An important consideration for participants is the 1 week withdrawal time from Arbitrum back to Ethereum; this makes it impossible to quickly bounce back and forth to the highest yield. We propose approving 100k OHM in funding to be used as bond payouts and staking rewards. This will be split into two 50k chunks, with a policy reevaluation in the middle. Given the entire amount is utilized, the liquidity pool should grow to to $15m-20m, and enough rewards should be provided to incentivize 100k-200k OHM. This OHM funding would be deployed over a minimum term of 1 month. (For reference, supply on Ethereum is projected to grow by ~700k OHM over the same term.) When this 100k OHM funding runs out, we will reassess the continuation of bonds on Arbitrum, and the continuation of variable rate staking.

Contracts are prepared and ready to deploy if/as soon as governance believes we should execute.

Motivation: Expand availability and presence of Olympus beyond Ethereum Layer 1. Experiment with a variable rate staking option. Become a dominant player on Arbitrum, especially with reference to liquidity – we want to make OHM one of, if not the, most liquid assets on Arbitrum.

For: Deploy to Arbitrum

For: Deploy to Arbitrum, but without variable rate staking

Against: Do not deploy to Arbitrum

Forum Post: https://forum.olympusdao.finance/d/102-oip-25-deploy-olympus-to-arbitrum