This discussion-proposal calls for:
- adding OHM passive lending pool to Gearbox, and
- setting up parameters for OHM pool’s Credit Managers whereas that also involves partial implementation (finally) of [GIP-47] Add MIM, Curve MIM and Convex MIM pools
Motivation
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:
Proposal
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 (%) |
|---|---|
| WETH | 75 |
| stETH | 75 |
| WBTC | 75 |
| USDC | 85 |
| DAI | 85 |
| FRAX | 85 |
| USDT | 85 |
| sUSD | 85 |
| gUSD | 85 |
| LUSD | 85 |
| MIM | 85 |
| FRAX3CRV-f | 85 |
| cvxFRAX3CRV-f* | 85 |
| 3Crv | 85 |
| cvx3Crv* | 85 |
| LUSD3CRV-f | 85 |
| cvxLUSD3CRV-f* | 85 |
| crvPlain3andSUSD | 85 |
| cvxcrvPlain3andSUSD* | 85 |
| gusd3CRV | 85 |
| cvxgusd3CRV | 85 |
| crvFRAX | 85 |
| cvxcrvFRAX | 85 |
| mim3CRV | 85 |
| cvxmim3CRV | 85 |
| CVX | 25 |
| FXS | 25 |
| LQTY | 0 |
| CRV | 25 |
| LDO | 0 |
| 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!
Voting
Let’s discuss first, then simple voting Approve / Reject / Abstain.