Hi, I was wondering how much revenues OMM makes? Is it added to the DAO? What do you think about distributing some of the fees to OMM holders?
I am wondering about this as well, it has been posted in telegram a couple times that we have to take matters in our own hands as we are a DAO. Is there no plan whatsoever? When balanced launched it was clear that there would be a vote after 2 months. What are our options and when can we vote on it.
I understand distributing the fees to token holders of OMM might make OMM a security in the future. So that is one of the downsides.
I think DK suggested to buy OMM using the fees and burn these OMM, will this have a major effect?
Hope we can have some discussion here.
Thanks for raising these points Bigrob! I am hoping to have a discussion on this. I understand that some points were raised on discord, but I didn’t see them so I would love to get the opportunity to read them here. I understand the OMM may be a security (if it’s not already is - we are voting for p-reps using OMM and they get money thanks to our votes, so OMM already has value and p-reps that HODL OMM expect a profit), however, I am not sure why this is so bad.
What about another token distributed to OMM holders that will have fee sharing? (and thus separating one for governance and the other for fee sharing).
I am a biologist by education and don’t know a lot about finance, so I would like to get input from the community and the team. Thanks for reading and responding.
I think OMM is not a security at the moment because it is fully open sourced and anyone can propose to change parameters through governance.
Based on the previous discord discussions, it seems like early contributors are concerned about it being treated as security if the fees are distributed (unknown, but can potentially be a trait of a security).
If OMM is ever considered a security, that will probably impact the protocol in negative ways as exchanges do not want to list security tokens and frontend may have to be geofenced to block U.S. users as we can’t trade security tokens.
In my opinion, Omm should follow other examples of using a portion to the protocol fee to buy back OMM tokens. This will create the buy pressure for OMM tokens, similar to BNB and many other tokens like ANC, and make OMM more scarce.
It seems like @Tada is thinking in the right direction and would support such a proposal.
Hi Tada, thanks very much for your answer.
Good point. OMM will stay an open source and we can use it as a governance token, regardless of our proposal. The expectation of profit will surely make OMM a security (I am not sure that p-reps that hold OMM don’t plan their OMM holdings according to profit expectations at this moment).
That’s a good point. Personally, I am less concerned with OMM being traded in centralized exchanges, but I know that most investors would disagree.
This is very interesting. If such a mechanism can prevent the token from being a security it sounds good. What about the allocation? I don’t want to throw random allocation numbers. Does something like having 20% fees go to the DAO, and the rest used for burning sounds good?
And to continue this line of thinking about giving utility to OMM, what about using OMM to give discounts on borrowing assets or lending them? The more OMM you have staked the lower the interest rate you get for borrowing. While, staking OMM can give you a premium when lending.
Thanks a lot for sharing your opinion. I think that if we’ll continue this discussion we might come with a proposal.
I am not based in the US nor know that much about US law however just wanted to add that not all omm holders are subject to SEC rulings.
The other thing I wanted to note was, in my opinion , I don’t see how just doing buybacks is enough to not count. There are stocks that have never and will never issue dividends and only do buybacks. Buybacks are an extremely common and institutionalised way of returning value to shareholders/token holders.
I agree with your point. I don’t see much difference between providing dividends and doing buybacks. But I am hardly an expert. Just using my logic. Perhaps, instead of buybacks, we can start with a premium or a discount on lending and taking loans. The proportion of your OMM stake can provide different tiers of lending and borrowing with premium rates.
Any answer for this? Sorry if this is public information, I am curious of the magnitude of fees.
Sorry, I didn’t get any answer.
You can see the total fee generated by the protocol here: ICON Tracker
This idea has been brought up a few times. The matter of fact is that Omm protocol already takes a very thin margin (10%), so maximum discount you can get from borrowers’ perspectives is 10% max. (Ex: IUSDC borrow rates - 30% to 27%) Do you think this is something that may be interesting as users?
I do think the idea of utilizing the protocol fee to grow the usage of protocol makes more sense at this stage of the protocol than buy back or distributing fees.
Yea, I see your point.
I don’t expect that this alone will attract users, but it will surely add value. And combined with other traits, it might attract users.
I agree that growing the usage of the protocol is more important.
Yeah, I can see that fees at the moment are not a lot (according to my estimations roughly ~100.000 USD per month), so definitely the path forward should be on growing the usage.
Hopefully BTP presents opportunities so user of other chains can supply their coins and tokens on Omm.
I’ve currently been using Geist Finance on FTM and Blizz Finance on AVAX, they are both forks of AAVE v2.
They both give 50% of platform revenue back to the investors that have locked their native token.
I really love that idea.
However as mentioned if it is a potential sec problem, then the use of platform revenue to buy and burn OMM is the way to go.
Or alternatively the revenue can buy OMM and keep it in the DAO fund for use later on, this still applies constant buy pressure and removes the OMM from the market.
I like the idea of buy back to create some buy preassure for Omm. I think it will be important since if the Omm token is valued too low, then the incentives of using the Omm platform drops. I also agree with that the DAO fund should be used to develop the platform but I am struggling a bit too see exactly where to go there. First I think we need to solve more utility for the omm token for it not to go too low.
Agreed. OMM needs more utility. Personally turning it into a security is not an issue for me so any developments that would make OMM more attractive to hold would be attractive for many (non-US citizens clearly). OMM has been on a downwards spiral and there is nothing in the pipeline to suggest that will change anytime soon. May as well have a token that offers utility and profit to some than a token that tanks to pennies for everyone.
Agree. I had a look at Aave. Maybe we should suggest a vote for some of their incentives?
That will then also make it more attractive to use Omm once BTP opens up to more cross chain activity.
Be aware that in a couple of months a lot more tokens will be released as well.
Agreed. Lets get a proposal going for omm to buy back their tokens.
Lets get a work in progress proposal going