FIP-51 OlympusDAO OHM-FRAX Uni v3 Gauge

Summary:
Add an OlympusDAO OHM-FRAX gauge.

Background & Motivation:
OlympusDAO has a strong partnership with the Frax Finance protocol. Olympus has always focused around mutually beneficial protocol interactions, it’s in the (3,3) culture. To date Olympus has created deep liquidity with FRAX at a depth of 6M, aided in POL for Frax Finance through Olympus Pro (Total Bonded Value of 5M) and utilizes FRAX as Risk Free Value for the protocol (33M in reserves). This partnership continued with a DAO swap (OIP-53 Execute DAO Swap with Frax Finance) and the acceptance of Olympus being able to stake its FXS tokens (FIP-38 Whitelist OlympusDAO to Stake veFXS). Without hesitation Olympus locked for maximum duration, 4 years.

OlympusDAO would like to continue this close relationship through addition of the OHM-FRAX LP on Uniswap v3 as a gauge on the Frax Finance platform. Olympus wants to continue to gain its exposure to the Frax Finance ecosystem.

Benefits of this Gauge:
1.) OlympusDAO is a whitelisted protocol that can stake veFXS so it will bolster Olympus’ holdings FXS and will continue to lock FXS supply away.
2.) Continue to grow our already successful partnership as Frax Finance continue to innovate.
3.) In the future Olympus will be able to offer benefits to partners driving TVL to Frax Finance.

For: Add gauge
Against: Do nothing

5 Likes

no brainer, totally in favor

1 Like

So OlympusDAO would basically own 100% of the pool and earn all the FXS rewards?

Yes, unless individuals wanted to contribute to the pool and earn rewards on it because Olympus will also use it’s FXS weight to vote on it’s own gauge. This is not dissimilar to what Frax Finance does with their own gauges on Convex. Additionally, this will drive a supply sink for FXS. I would like to think it will actually help in driving value and demand to FXS given the perpetual move toward scarcity.

1 Like

i guess this is a way to direct some of the gauge rewards in long term holders hands.

i agree, it would be a pool thats mostly owned by OHM, but if a protocol owns most of the pool its more likely to pay for bribes (if the maths adds up).

1 Like

I think FXS rewards should be used to compensate for risky positions that contribute to Frax or for new use cases. Considering that Frax does not lack liquidity on mainnet, Olympus wouldn’t be taking any risks, Olympus could begin creating a dangerous cycle of hoarding FXS emissions which are used to direct more FXS emissions to themselves, and the OHM/Frax pool has had $0 volume the last week, I think this wouldn’t be a good use for FXS emissions.

Olympus has made Frax Finance a primary partner in RFV accumulation, tying OHM to FRAX via an LP, swapped OHM for FXS and partnered with Frax Finance with Olympus Pro. Not to mention that Olympus has also voted several times for the FRAX curve gauge with it’s CVX weight of almost 1% of total supply. All of these decisions contain their own risks. I would argue Olympus has continually taken risks in exposure to the Frax ecosystem but the DAO believes in the protocol and it’s assets. There are other protocols that also utilize their FXS holdings for their own pool, an example of this is StakeDAO which passed governance.

Secondly, the pool has seen volume however Uniswap v3 is not showing the data since the pool is freshly made. We are going to be migrating the liquidity again soon. This doesn’t take into consideration that Olympus will continue to create a supply sink for FRAX and FXS. I also didn’t mention the numerous other future collaborations that Olympus is working on directly with Frax Finance.

https://info.uniswap.org/#/pools/0x69061b8a0214a8d10145d8471730151434ca54ff

1 Like

Olympus can also leverage the FXS for newer protocols that want to associate themselves within the Frax Finance ecosystem. It’s honestly more about utility, opportunities and partnerships… 3,3. And remember, Olympus will never sell. :slight_smile:

1 Like

We aren’t deciding the FXS emissions with this vote - there could be 0 emissions unless veFXS holders vote for the gauge - no doubt Olympus will as is their right. This is no different from Temple, StakeDAO gauges - except Olympus already provides substaintial liquidity for the FRAX-OHM pair - Olympus is a large holder of FRAX as a stable coin and a major holder of veFXS. FRAX-OHM is a major liquidity rail and Olympus will retain its FXS rewards so will not put negative pressure on the FXS. Also the volume is usually at least has been an average of about $200K per day in the last week for the pool not $0 DEX Screener

I support this proposal - Olympus will be a large holder of FPI and continue to be a large holder of Frax - if we extend the opportunities for a gauge to newer protocols we can’t deny the opportunity to partners who are already providing liquidity rails for FRAX

1 Like

If the pool is mostly just POL then this just becomes an infinite feedback loop for ohm to increase fxs holdings.

Also “We’ll totes lock up more fxs” is a pretty weak argument for this. Should be focused on why the pool is useful

3 Likes

I’m very strongly against this. The Ohm-Frax pool already exists, this won’t drive any new demand for Frax, and will only result in Ohm sucking some % of the gauge rewards out.

It’s clearly good for them, they get to earn an additional reward on the FXS they currently hold, but it brings no benefit to us other than I guess they’re likely to re-lock their FXS which presumably would also be true for any other protocol who had a gauge pair added for their gov token.

I know @samkazemian doesn’t like this sort of thinking but the FXS rewards in the gauge are 0 sum. If Ohm is sucking some of them out that means there’s less to go around for all other gauge participants. That can be fine if we’re getting some clear benefit on the other side but in this case I really don’t see how this benefits us at all, it’s literally just free money for Ohm.

As an example what would provide us with a real benefit is if Ohm agreed to convert their entire (or at least a large %) of their Ohm-Dai pool to Ohm-Frax. That would be something I would possibly support.

1 Like

OHM-FRAX is, and has been, a major liquidity rail for OHM and FRAX trading on Uniswap - incentivizing it to be maintained as a liquidity rail is useful for FRAX liquidity on Uniswap. Olympus locking up the FXS rewards that are sent its way is just a bonus.

It’s not though. There’s a $8M Ohm-Frax pair compared to $100M Ohm-Dai, $32M Ohm-Eth and $13.8M Ohm-LUSD. It’s literally the smallest of all Ohm’s liquidity pools and makes up like 5% of OHMs liquidity. Also Ohm is currently in the process of moving all their liquidity to Uniswap: Snapshot

It’s not even clear OHM is going to incentivize this with OHM rewards like they did last year when they had a pool with us. If they don’t there’s going to be no reason for anyone to add liquidity, doing so would almost definitely be inferior to just buying an OHM LP bond and selling it to them, and OHM will just own 100% of the pool and the rewards without any incentive to increase the size of the pool or even disincentive not to decrease it.

The pool that already exists will stay exactly as it is just now Ohm will be sucking some % of the gauge rewards out every week. Also the fact they plan on relocking their FXS so the amount they suck out grows week over week isn’t exactly a bonus.

This will almost definitely result in overall Frax liquidity decreasing. As I said the gauge rewards here are 0 sum. If Ohm is sucking some out there’s going to be less for all the other existing pools. Less rewards mean less incentives for the other pools which almost definitely will shrink in response. We’ve seen before the size of the pools clearly fluctuate in response to reward $ changing with each new gauge vote.

Seriously this is a really, really bad proposal. Unless there’s something I’m missing, like OHM is bringing something concrete on their side that’s just not being mentioned this is a pure value transfer from us to them.

Has OHM mentioned if they’re going to also incentivize the pool with OHM rewards? If not no new liquidity will come into the pool, it will always be inferior to buying OHM bonds or staking OHM directly.

Hi @C2tP-C2tP - I am from ICHI and I would love to connect with you to discuss a POL opportunity for a useful pool :slight_smile:

Would you be open to scheduling a call with me this week to get acquainted?

seems they have opted to add nothing to the staking rewards.

the 2 you mention both add rewards to the pools. it may not be much but its something

Olympus has bonded in millions of dollars of FRAX and it also consistently bonds in large amount of FRAX for it’s LPs. Obviously these rotate based on LP positions and where they’re located. The LP would be incentivized based on Olympus’ veFXS holdings and anyone may go and benefit to get FXS. However, the current APY for OHM is ~900%, Olympus feels this is a lot to incentivize/inflate.

OHM-FRAX position will increase overtime, it’s important for Olympus to balance it’s asset exposure in LPs as it grows and develops as a protocol, however, to say Olympus has been net negative or neutral with Frax Finance is really hard to back up given the numerous integrations and partnership opportunities that have been executed on.