Discussion around using bond discounts as a floor
DEPARTMENT or DAO: Though this proposal is addressed primarily to Growth & Treasury, it could affect all of us, and thus I hope everyone involved in Lobis Finance will read and consider this.
WHY: Though not necessarily a problem, I am trying to solve for decreasing unit price or marketcap to treasury ratio. We recently developed a strategy to solve this through an ingenious treasury buyback strategy. However, after vigorous discussion, that plan was put on hold. Though low price in and of itself does not necessarily constitute a risk, it is possible that it could lead to better capitalized protocols purchasing a controlling interest in Lobi. That could affect Lobi’s goals to maintain Decentralized Finance as a utopian democratic space. It’s not entirely clear to me that the idea I am presenting is the best solution, so if other, wiser souls point out the folly of this plan, listen to them.
WHO: Cthulhu of the @culturecouncil
WHAT: Without changing bonding discount dynamics for the vast majority of circumstances, reduce maximum bond discount when Lobi market cap is lower than the value of treasury.
HOW: Change the bond discount contracts.
WHEN: Once conversation around this allows us to determine whether or not it is a good idea, probably 1-2 weeks.
To borrow the words of others,
“What we’re doing here is especially difficult, because we’re bootstrapping from zero. Fair launch means none of the core had any advance allocation, it also means nobody in VC is interested in funding us.” @plutusIIIIII
Lobi Finance is driven to succeed in building a dao to dao metagovernance network for a decentralized future. In this noble goal, we derive our strength from both idealists, and realists. Those who wish to build a if not the free, open and non-discriminatory financial governance provider for ethereum, and those who wish to raise their social standing by partaking in the unprecedented wealth generation opportunities of this decade. If price goes against us too often or for too long, some may lose faith, or simply be forced out of positions due to weak hands.
Usually rebase protocols, and other crypto assets, are boosted to the moon by opportune buying by deep pockets. Those who buy fud and set the floor, often have 8-10 figure wallets. We’ve seen this many times over this bull cycle: Silbert & Zcash, SBF & Solana, Merlin & Spell, etc. Olympus designed the treasury buyback mechanism to behave as a benevolent whale, gathering treasury through lp fees, sales premium, and revenue sources to be able to purchase back ohm should the price ever fall below the level of 1 usd.
Though it is not entirely precise to call the treasury value of Lobis’ governance assets risk free value, this proposal is based around the idea that we’d like to set a marketcap floor close to the treasury value.
One way to inspire upward price action in the absence of great whales, would be to cap bonding discounts whenever Lobi price drops below the current value (or the 7day moving average value) of the governance tokens represented in each circulating Lobi. E.g.
These figures are not accurate:
Lobi governance token worth Lobi token price
200usd 200usd continue as usual
200usd 198usd cap bonding discounts at staking rewards +5%
200 196 cap bonding discounts at staking rewards +4%
200 186 cap bonding discounts at staking rewards -1%
This would create an incentive floor at which point it would be more profitable for the user to simply buy and stake instead of bond and stake. This would not always instantly function, in market wide sell offs, people might sell Lobi to cover debts, or in search of speculative opportunities, etc. But it would gradually push price back up after these events.
-Other bond parameters that we could shift instead. We could instead modify the total capacity of the bonds, so that most people would be better off buying and staking, except for perhaps a few who luckily mint at the right moment. In general this would lead to more buying relative to bonding.
-We could decide to apply this to only bonds where we have collected the current desired % of treasury or usd equivalent amount. E.g., if we already have more than enough crv, but still want to accumulate fxs or angle, we could specifically apply the restriction to crv.
I do not believe that this change would significantly reduce treasury growth, based on an assumption that the vast majority of our treasury has come from dao-to-dao partnerships. And though, incentivizing large quantities of retail bonding will help us grow our treasury to the size necessary for our governance dreams to have the benevolent impact we wish, I don’t believe this proposal would significantly curtail growth.
In fact, it’s entirely possible that it could stabilize prices in a way that inspires more dao to dao partnerships.
It’s entirely possible that this is proposal is rife with errors, inaccuracies, or ape-induced economic blindness. For this reason, I hope this leads to a fruitful conversation in both the forum and the discord channels.
Onwards and Upwards,