Add OMM and BALN to Omm

Proposal discussion WIP: OIP
#1

Now that bnUSD has been added to Omm, I think it is a good time to consider which new assets to add. I would like to propose adding OMM and BALN tokens.

About OMM and BALN

OMM is a governance token for Omm protocol.
BALN is a governance token for Balanced protocol.

Statistics

OMM Circulating Supply/MC: 21,994,460/$9,017,728
BALN Circulating Supply/MC: 14,547,166/$23,420,937

OMM Liquidity: ~$6M across 3 pairs on Balanced
BALN Liquidity: ~$14M across 2 pairs on Balanced

OMM Volume at time of writing: ~$1M across 3 pairs on Balanced
OMM Volume at time of writing: ~$700K across 2 pairs on Balanced

Oracle

OMM oracle uses a weighted average of 3 pairs on Balanced
BALN oracle uses BALN/sICX pair on Balanced

After OMM and BALN are traded on more venues, has more liquidity and/or is offered on a reliable oracle solution I would propose we migrate this method to pulling data from an oracle solution such as Band Protocol.

Risks

Because OMM and BALN are relatively new assets, there is limited amount of trading volume and liquidity, and these asset prices may be manipulated to trigger liquidations. Thus, I would recommend lower LTV and liquidation threshold initially.

OMM is also a governance token for Omm protocol, so probably doesn’t make sense to enable people to borrow OMM tokens in case they abuse it for governance process.

Economics

I’d like to propose allocating from the ICX rewards to OMM and BALN.

ICX = 36%

OMM = 2% (supply)

BALN = 2% (1% supply/1% borrow)

For LTV, I suggest setting the initial LTV for OMM and BALN to 25% (1/2 of ICX) and liquidation threshold to 32.5% (1/2 of ICX)

4 Likes
#2

It sounds weird to make supply and borrow mechanism with governance token in its own protocol.

#3

Protocols like Aave and Compound have their own governance tokens on the market, and it is a way to add utility for these tokens. Aave only has AAVE available as collateral for example as Tada is suggesting.

1 Like
#4

oh… I didn’t know that. Thx!!

#5

I feel its uncommon to be able to short a platforms token on the platform. I think someone has mentioned a few platofrms where you can in fact do that, but by and large it is uncommon. You can’t borrow BNB on Binance, and you can’t borrow KCS on Kucoin.

I think its a bit unecessary to expose such small mcap tokens with only internal markets to easy shorting. Before even talk about manipulation, just the normal additional sell pressure is going to have an impact.

Facilitating parties with negative exposure to the asset to gain governance rights… which directly influence the price of that asset, seems risky at this early stage, when the mcaps are small. This is in contrast to traditional stock where borrowers of stock do not get voting rights. What Voting Rights Do Shorted Shares Have?

Some new posts have appeared as I am typing this, but AAVE and Compound do not have the same extremely small mcaps of OMM or BALN.

EDIT: Additionally if I am not mistaken, it should be possible to be staked, vote on a negative outcome, and unstake before the the vote even concludes on both platforms.

1 Like
#6

One thing to note here is the upcoming change on BALN staking/governance. With the launch of bBALN, it will be quite difficult to accumulate large governance power with a short unstaking period and execute this type of attack (I’d think).

The minimum lockup period becomes 1 week, and locking for 1 week gives you 0.0078125 bBALN compared to locking for 4 years gives you 1 bBALN. link

Additionally, another use-case of borrowing BALN is if you believe the APY boost you’ll receive by locking it, along with the network fee distributions, is higher than the prevailing rate on Omm. So there’s more use case than shorting fwiw.

2 Likes
#7

Do you think it makes sense to just focus on OMM instead of BALN if BALN will go through a change in staking/governance process with bBALN? I am guessing bBALN won’t be transferrable, so may not matter?

#8

Right, bBALN is not transferable so I think it’s fine to move forward before that change.

#9

OMM and BALN are added on testnet, and people can test it out at https://test.omm.finance/

I would actually like to propose different OMM rewards economics for OMM and BALN market from the initial proposal.

It seems like the community like to do A/B testing, so OMM and BALN markets can be another avenue for A/B testing. Right now, money markets on Omm are primarily driven by OMM rewards. It would be interesting to not incentivize OMM rewards for BALN market, and see how much demand there is natively within the ICON ecosystem.

Also, OMM suppliers will likely be already long on OMM, so they are less likely to sell OMM compared to other asset suppliers. It would be interesting to see if this proposal alleviates sell pressure for OMM tokens.

I would like to propose:
ICX = 36%
OMM = 4% (supply)
BALN = 0%

2 Likes
#10

This adjustment sounds good, maybe I would give 1% to BALN so they can have a small taste of the token?

ICX = 35%
OMM = 4%
BALN = 1%

#11

Think OMM rewards can be added to BALN market later, but the main purpose of not incentivizing initially is to understand the innate leverage intent within the ICON ecosystem. BALN holders are likely the savvy defi users within the ICON ecosystem, so it would be good to see their behavior without the incentive structure.

Also, just a hypothesis, but BALN suppliers/borrowers are likely going to sell more OMM tokens than regular ICX suppliers as they are likely going to be active defi users, so would be good to roll it out slowly after the initial market launch.

OIP 6: Add OMM and BALN to Omm
#12

Ok will make the proposal.