1/N
A quick 🧵 on the state of POL and OHM V2.
$OHM $KLIMA
I’m basically burnt out right now and this thread will be too short.
Fact of the matter is that the discussion is happening now, with or without me.
The following info is critical and time sensitive, so here it is:
A quick 🧵 on the state of POL and OHM V2.
$OHM $KLIMA
I’m basically burnt out right now and this thread will be too short.
Fact of the matter is that the discussion is happening now, with or without me.
The following info is critical and time sensitive, so here it is:
2/N
I wrote a lot of words in a lot of places but never left a summary of my thoughts in one place.
I’ll link my first mega 🧵 that explains a lot. Sadly, I am too tired to explain what’s new or been refined. Sorry 😢
1️⃣ POL system and market dynamic is a monetary system.
I wrote a lot of words in a lot of places but never left a summary of my thoughts in one place.
I’ll link my first mega 🧵 that explains a lot. Sadly, I am too tired to explain what’s new or been refined. Sorry 😢
1️⃣ POL system and market dynamic is a monetary system.
3/N
To make that clear: they have their own unit of account (backed by RFV), that’s OHM for Olympus.
POLs also control the supply of the UoA (indirectly) via the policy that they set.
Real world monetary authorities do that today but I won’t call it what it is. #IYKYK
To make that clear: they have their own unit of account (backed by RFV), that’s OHM for Olympus.
POLs also control the supply of the UoA (indirectly) via the policy that they set.
Real world monetary authorities do that today but I won’t call it what it is. #IYKYK
4/N
2️⃣ Early POLs policy is set to dilute the UoA by design.
This kickstarts the bonding cycle and builds treasury value.
Treasury assets create revenue via POL LPs. That revenue goes to stakers who gain value (measured in RFV). Cool. So, stale and chill, right?
2️⃣ Early POLs policy is set to dilute the UoA by design.
This kickstarts the bonding cycle and builds treasury value.
Treasury assets create revenue via POL LPs. That revenue goes to stakers who gain value (measured in RFV). Cool. So, stale and chill, right?
5/N
Well… that depends. Right now, there is little utility for {POL} besides the desire to “gain RFV” via staking.
That means you have to time your entry / exit just right. Why? Because policy rates might dilute RFV faster than APY can pay out.
This has been happening*
Well… that depends. Right now, there is little utility for {POL} besides the desire to “gain RFV” via staking.
That means you have to time your entry / exit just right. Why? Because policy rates might dilute RFV faster than APY can pay out.
This has been happening*
6/N
** but OHM may be starting its next “Premium wave cycle” right now.
I’m a week or so behind the data, but I’d reckon that V2 will likely catalyze one. Plus, price (indexed) has been up a bit recently so it really depends on the data.
** but OHM may be starting its next “Premium wave cycle” right now.
I’m a week or so behind the data, but I’d reckon that V2 will likely catalyze one. Plus, price (indexed) has been up a bit recently so it really depends on the data.
7/N
Further analysis of this requires a key distinction between types of cash flows: diluting and non-diluting (relative to RFV backing).
If the net effect of a cash flow creates an increase in total supply (greater than it’s impact on RFV), then it is diluting.
Further analysis of this requires a key distinction between types of cash flows: diluting and non-diluting (relative to RFV backing).
If the net effect of a cash flow creates an increase in total supply (greater than it’s impact on RFV), then it is diluting.
8/N
It also helps to think of the same “diluting” or “non-diliuting” as “internal” or “external” to the system.
3️⃣ Bond revenue is a diluting cf.
I have to play more with this dynamic, but some if not all bond revenue dilutes supply more than it adds to RFV.
It also helps to think of the same “diluting” or “non-diliuting” as “internal” or “external” to the system.
3️⃣ Bond revenue is a diluting cf.
I have to play more with this dynamic, but some if not all bond revenue dilutes supply more than it adds to RFV.
9/N
If some bond revenue is indeed “non-diluting” then it is still the same as a “market-buy” below.
4️⃣ Diluting / internal cfs do not create “real” yield.
5️⃣ The only real value creation of a POL is (RF Rev treasury + utility [negligible for now]).
If some bond revenue is indeed “non-diluting” then it is still the same as a “market-buy” below.
4️⃣ Diluting / internal cfs do not create “real” yield.
5️⃣ The only real value creation of a POL is (RF Rev treasury + utility [negligible for now]).
10/N
6️⃣ Stakers also get “real” APY from net cash in / out of POL (+ or - ApY effect respectively)
This is up to market really, but it is (highly positively) correlated with overall sentiment / confidence.
This is not really sustainable real APY. Markets find balance.
6️⃣ Stakers also get “real” APY from net cash in / out of POL (+ or - ApY effect respectively)
This is up to market really, but it is (highly positively) correlated with overall sentiment / confidence.
This is not really sustainable real APY. Markets find balance.
11/N
👉 This whole POlL system is EXACTLY like any monetary authority (and their debt) that exists irl today EXCEPT
👉 RF backing makes the currency non-fiat and not a “debt”
👉 AND right now, POL fails to incentivize long duration debt holders better than they do short dur
👉 This whole POlL system is EXACTLY like any monetary authority (and their debt) that exists irl today EXCEPT
👉 RF backing makes the currency non-fiat and not a “debt”
👉 AND right now, POL fails to incentivize long duration debt holders better than they do short dur
12/N
⭐️ That last point creates market dynamics that are harmful to new investors for long stretches of time. During this time they could net more {POL} if they just buy later. Why?
When policy is diluting RFV backing faster than APY pays, buying later is better.
⭐️ That last point creates market dynamics that are harmful to new investors for long stretches of time. During this time they could net more {POL} if they just buy later. Why?
When policy is diluting RFV backing faster than APY pays, buying later is better.
13/N
⭐️ There is an a lack of incentiviaztion, POL wide, to hold through that period.
I heard a lot about %mcap, and that’s great. I get it, your share grows, great.
But if total mcap is decreasing, and continuing down, %mcap gain is still a loss of base asset. 🤷♂️
⭐️ There is an a lack of incentiviaztion, POL wide, to hold through that period.
I heard a lot about %mcap, and that’s great. I get it, your share grows, great.
But if total mcap is decreasing, and continuing down, %mcap gain is still a loss of base asset. 🤷♂️
14/N
This entire dynamic is because short duration hold gets the same reward as long.
⭐️ 🌟OHM V2 will not solve this problem.
Right now, there is a single market with duration and rate (albeit variable with time).
OHM V2 creates better yield over time with internal bond BUT
This entire dynamic is because short duration hold gets the same reward as long.
⭐️ 🌟OHM V2 will not solve this problem.
Right now, there is a single market with duration and rate (albeit variable with time).
OHM V2 creates better yield over time with internal bond BUT
15/N
The bond vaults are the issue.
With OHM V2 there will be many markets, each with one duration and rate.
[Not the same as one market with many durations and yield curve!]
Since those are tokenized and liquid, each one will have the same problem the single one does now.
The bond vaults are the issue.
With OHM V2 there will be many markets, each with one duration and rate.
[Not the same as one market with many durations and yield curve!]
Since those are tokenized and liquid, each one will have the same problem the single one does now.
16/N
⭐️ Short dur holders (of each new token) will sell.
That will create the same dynamic as we see now (for each new market).
Net effect on the protocol level is the same but with more “math noise” (that’s what dilutive Bond cash flows are right now anyway ps).
⭐️ Short dur holders (of each new token) will sell.
That will create the same dynamic as we see now (for each new market).
Net effect on the protocol level is the same but with more “math noise” (that’s what dilutive Bond cash flows are right now anyway ps).
17/N
It’s a bit diminutive to call bonds (and their power) “math noise” because they’re cool and have a ton of potential.
Same is true with OHM V2 which has some net positives (but at a cost of high complexity).
In this context though, that is what they are.
It’s a bit diminutive to call bonds (and their power) “math noise” because they’re cool and have a ton of potential.
Same is true with OHM V2 which has some net positives (but at a cost of high complexity).
In this context though, that is what they are.
18/N
I’m not hostile to POL, I was here to help.
I’d love to have a productive conversation about this, but I must stay away from this now.
I rested today and was able to get this out. That’s is the balance right now and I need more rest. A long rest maybe.
I’m not hostile to POL, I was here to help.
I’d love to have a productive conversation about this, but I must stay away from this now.
I rested today and was able to get this out. That’s is the balance right now and I need more rest. A long rest maybe.
19/N
Truthfully, Idk that I’ll even actually be back. Maybe a new anon jpeg, maybe not. Maybe I’ll be fine and rested tomorrow morning 🤷♂️
For now, I thank you all for any time and attn you have given to my thoughts. I am not used to that, and I am grateful to you. 🙏
Truthfully, Idk that I’ll even actually be back. Maybe a new anon jpeg, maybe not. Maybe I’ll be fine and rested tomorrow morning 🤷♂️
For now, I thank you all for any time and attn you have given to my thoughts. I am not used to that, and I am grateful to you. 🙏
20/N
Link back to old 🧵below.
There’s also more in the OHM gov forum (Zeus posted a link to the specific place on Friday).
KLIMA contributors can see some more in “#policy sprout” channel (that name might be a bit off) .
Link back to old 🧵below.
There’s also more in the OHM gov forum (Zeus posted a link to the specific place on Friday).
KLIMA contributors can see some more in “#policy sprout” channel (that name might be a bit off) .
https://twitter.com/Chees_eth/status/1492267892213174278?s=20
P.S. it wasn’t a “quick 🧵” was it?
Can’t edit, so there that stays.
Can’t edit, so there that stays.
Key clarifications for above:
Right now, there is a single market with a *single* duration and a *single* rate (albeit variable with *the current state of market parameters at a given time*)
OHM V2 creates *a yld curve with duration* and better yld *for long dur via* int bond
Right now, there is a single market with a *single* duration and a *single* rate (albeit variable with *the current state of market parameters at a given time*)
OHM V2 creates *a yld curve with duration* and better yld *for long dur via* int bond
Clarifications for tweet #14 (replied under that post and) linked here:
https://twitter.com/Chees_eth/status/1493117704261222400?s=20
Another clarification:
In the thread, I reference “diluting” and “non-diluting” quite a bit.
Key to note (and I did start by saying) that I am talking about diluting the RFV backing per coin.
Maybe “diluting the premium” is more clear.
In the thread, I reference “diluting” and “non-diluting” quite a bit.
Key to note (and I did start by saying) that I am talking about diluting the RFV backing per coin.
Maybe “diluting the premium” is more clear.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
