kip: TBD title: Olympus Pro Bond Program author: lapras firstname.lastname@example.org status: pre-draft created: 2020-10-19
Enter Olympus Pro’s Bond Program with 5,000 ROOK on a 15-week trial.
Despite continued fundamental strengthening within the DAO (inclusive of the launch of governance), the ROOK token has faced inclement price action that leaves it undervalued (this is still evident, despite some recent recovery). This has been exacerbated by a lack of token liquidity.
Olympus Pro offers an appealing resolution to this illiquidity.
Olympus Pro bonds offer governance tokens at a discount in exchange for liquidity. Implementing ROOK bonds would provide a sustained source of protocol-owned liquidity for the treasury (ROOK:wETH Uniswap v2 tokens and Sushiswap).
Ultimately, owning productive liquidity with the treasury is a scalable, multi-beneficial adjustment.
• Permanent liquidity floor supports investors and minimizes down side risk
• Token liquidity is an important factor many Price Oracles require
• Minimizes Volatility
• APY from trading fees
• Additional DEX liquidity without having to commit treasury ETH reserves
• Discounted ROOK tokens open some surface area for arbitrage. The thesis is the bond period, with anticipated appreciation, would make it non-trivial to execute on the arbitrage. Bond vesting periods are configurable; the default is 7 days.
• Opportunity to distribute ROOK to a wider group of committed users
• Discounted price for new ROOK buyers
• Bond period briefly locks up ROOK
• Relationship with a project with a strong community and potential for future synergies
• We should not add additional emission sources by minting new ROOK tokens to commit to a bond program.
Instead, we have a few choices. The most appealing option is to use Strategic Reserves ROOK. The founding team agrees this is an apt use for Strategic Reserves and would be happy to use 5,000 ROOK for this.
Team members have had preliminary conversation with OlympusDAO and both teams are aligned. The DAO needs to converge (via rough consensus) on a few decisions:
- A binary decision if we pursue this arrangement (suggestion: yes);
- ROOK allocation amount (suggestion: 5,000 ROOK - currently agreed upon by all parties involved);
- Duration of trial (suggestion: 15 weeks);
- ROOK Source (suggestion: Strategic Reserves);
- Bond period (suggestion: 7 days)
- Enter Olympus Pro’s bond program with 5,000 ROOK (from Strategic Reserves) to last 15 weeks. This will yield us ROOK:wETH liquidity to support long term price stability and health on Uni v2 & Sushiswap.