[GIP-57] Set up OHM lending pool

This discussion-proposal calls for:


Olympus DAO has been focusing on OHM’s price stability over the past year. Instead of high staking APY and high price volatility in the past, an algorithmic open market module (‘Range Stability’) has been deployed, helping to stabilize OHM around a floating price target. More details on bonds mechanism you can find here. As you can see, these improvements help OHM price be more stable during last 180 days:


1. Deploy OHM passive lending pool

That is to be freely available to anyone to passively lend their OHM like other pools we currently have:

Olympus Community launches AMO Lending proposal to serve as minimum liquidity level for Gearbox OHM passive pool (see details here). Thus, directly contributing to TVL & Gearbox Protocol growth <3

Very cool!

2. Caps: both per CA and overall on pool

Set Max cap for OHM pool: 500,000 OHM (more so a random large number), while for Credit Accounts users’ borrow amount in the range of 15k-100k OHM (equal to $150K-$1M worth). The limits for personal caps is similar to existing limits in stablecoin pools.

The logic behind overall cap on pool is to limit potential exposure for new asset. On the one side, OHM has ~60M liquidity on DEXes and internal logic of price stabilization. On the other side, most liquidity is in CFMM-like Balancer pools and in the case of a malfunction of the OHM stabilization mechanisms, we can end up with >10% slippage for 500+k OHM. To be honest, this is unlikely, but over the past year we have seen many unlikely events. Better start safer.

3. GEAR emissions

The goal of this proposal partly is to grow DAO to DAO relations and offer different strategies (due to a new lending pool) to leverage ninja side, amongst other things. When such a move was done previously, Frax pool being first of that kind - received support from Gearbox DAO so they + their holders would earn extra yields. It’s hard to speak to the efficiency of that move, given the pool is relatively small (PoolService | Address 0x79012c8d491dcf3a30db20d1f449b14caf01da6c | Etherscan) - so it’s somewhat subjective on how one can view this.

Keeping it an open question on how much GEAR issuance Gearbox DAO is ready to give to this pool, referencing [GIP-30] LM Adjustment №1 - #15 by RV_ivangbi for the current numbers on other pools. In this case, OHM avenues for making %% are not vast, so doing any non-trivial amount of GEAR emissions could potentially attract good passive lending sizes. Could be a good strategy!

4. Interest rate curve

Gearbox Pools use Aave-like interest rate curve depending on Pool’s utilization ratio. Read more here. In V3, this curve is expected to be improved, see more in Gearbox V3 Teaser: ReDEFIning Leverage and Lending. | by Mugglesect | Gearbox Protocol ⚙️🧰 | Mar, 2023 | Medium.

Parameters for OHM pool are suggested following:

r0 r1 r2 U*
0 4 100 80

The choice of parameters based on the farming APY in the pools Convex/Curve pools, which will be available in v2. The reasoning for a higher R1 is the ability to leverage into MIM strategies which currently yield the most from what is enabled in Gearbox V2. As such, if one were to expect this strategy<>pool link to be popular, a higher R1 due to availability of superior yields seems justified. See more in #6.

5. Protocol fees

Liquidation fee & premium, interest rate spread parameter, read more in docs is suggested to keep same as for other pools:

  • Liquidation fee: 1.5%
  • Liquidation premium: 4%
  • Interest rate fee: 50

6. Add assets and set up LTs for OHM pool

Token OHM pool LT (%)
stETH 75
DAI 85
sUSD 85
gUSD 85
MIM 85
cvxFRAX3CRV-f* 85
3Crv 85
cvx3Crv* 85
cvxLUSD3CRV-f* 85
crvPlain3andSUSD 85
cvxcrvPlain3andSUSD* 85
gusd3CRV 85
cvxgusd3CRV 85
crvFRAX 85
cvxcrvFRAX 85
mim3CRV 85
cvxmim3CRV 85
CVX 25
FXS 25
CRV 25
SNX 25

For reference, you can see other LTs here: AllowedList Policy - Gearbox Protocol

Above, you can see proposed final deployment-addition of the MIM assets, which was already approved in [GIP-47] Add MIM, Curve MIM and Convex MIM pools. However, due to V3 work and inability of grantees to execute the deployment within the last few weeks, this task was delayed. That is suboptimal but is already being worked on to be improved in the future, see https://medium.com/gearbox-protocol/gearbox-v2-evolution-evaluation-and-what-next-feb8c4127af6. Sumimasen.

The idea is to implement MIM in this OHM pool specifically, for now: that helps test a more riskier asset pair on smaller amounts, as well as keeps MIM as a more potentially interesting integration for the V3 Alpha Pool, where high leverage ninja earnings can better be relayed to the passive lending APYs. Currently, due to 1-point utilization curve, that doesn’t work well, so the integration would be a bit of a waste from the product development point of view. If you disagree, please debate below.

Also it’s good to notice that after v2.1 is going live other OHM farming options can be added, for example Convex OHM/FRAXBP or Balancer/Aura OHM/DAI and OHM/wstETH.

It’s worth pointing out that having a OHM/FRAXBP style (but without lockups required as 24/7 liquidity is needed for possible liquidations) leverage integrated for Allowed List of Gearbox would be a good avenue for this pool. Anyone with experience could actually take upon this task and make the integration possible sooner!


Let’s discuss first, then simple voting Approve / Reject / Abstain.


on GEAR emissions side pinging @ov3rkoalafied - wdyt? Taking into account good organic APYs on the pools side due to interest rate curve (idk exact number, but guess will be something between 3-5%), adding few %% GEAR rewards make sense to me…

yeah IMO target 2%-3% just to keep rates low-ish to incentivize ppl to figure out use cases. It needs to be low enough that we actually see people figure out use cases rather than just extracting value from liquidity mining, but high enough to incentivize people to actually take a chance at finding use cases rather than having empty pools. I lean towards 3% as higher is usually better than as people figure out strategies you can taper that off a bit.

1 Like

support it. let’s target on +3% apy for 250k OHM pool (guess, pool growth will be simialr to FRAX pool, so 250k OHM good target for 1st month).

If my calculations correct, it’s 2.85GEAR/block (~140k GEAR/week). @ov3rkoalafied pls check.

So bump up R1 basically? Or not really?

G1. Given Olympus DAO is initially providing the liquidity, do we need to offer GEAR emissions? Might make more sense to see how people use it, and set a lower interest rate on it to make it attractive, assuming Olympus doesn’t need to earn significant APR on the pool. Then if usage grows beyond what the AMO can provide, we can consider incentivizing so that borrowers want to join. Agreed a small amount would also be good. just doesn’t make sense to go too hard esp before we see any CA users find use cases for the OHM, given I also don’t believe there is any immediate leverage farming use case? Honestly all the use cases I can think of would involve swapping to OHM, not necessarily borrowing it.