After the recent Omm exploit, the Omm contributors have given a lot of thought about the direction of the Omm protocol. Since the exploit, the contributors have been closely monitoring the outflow from the protocol, and there has been a significant outflow in stablecoin from the protocol (up to 77%). Given that the main purpose of the lending protocol is to enable people to borrow stable coins against other collateral, a significant reduction in the stable coin pool makes it difficult to sustain Omm as a lending protocol.
Initially, Omm was built to provide utility to ICX holders so that they could utilize ICX to borrow fiat-backed stable coins (IUSDC, USDS) so that users could use IUSDC back in the Ethereum ecosystem or use USDS in the real world. We believed that this utility would bring more value to ICX holders. In hindsight, most people were using Omm to extract yield in OMM tokens without necessarily using it for its intended purposes.
It is also becoming clear that bnUSD is becoming the favorite stable coin of the ICON ecosystem, and it will be used for many ecosystem initiatives such as CPS, xCall, etc. Given that bnUSD can be minted through Balanced, and IUSDC & USDS are not being utilized as intended, we have come to the conclusion that there isn’t a real need for the money market in the ICON ecosystem.
Instead, we would like to double down on bOMM functionality, which seems to have resonated well with the community. While looking for use cases for bOMM, we learned that sICX team has been looking for ways to decentralize their protocol, and we realized that Omm can help the process given that there are 10K+ token holders. Thus, we would like to propose merging with sICX team to become a new liquid staking protocol of the ICON ecosystem. After multiple discussions with community members on Discord and the sICX team, we would like to propose the following changes to sICX. We believe that this new design will enable Omm and sICX team to continue to improve the liquid staking protocol while doing what is best for OMM token holders:
- The default delegation preference of sICX will be based on bOMM weight across validators
- sICX holders will be able to override the default preference and choose their own preferred validators
- 10% of sICX staking yield will be charged as fee (Lido example)
- 10% of the fees will go to the sICX team wallet
- 50% of the fees will go to the DAO fund
- 50% of the DAO fund will go to a wallet for a group of individuals and organizations who supported the recovery process
- 40% of the fees will go to bOMM delegated validators based on their bOMM delegation
In addition, we would also like to propose halting OMM inflation once the liquid staking protocol goes live as there are no incentives needed for a money market. Instead of incentivizing LP pools, Omm can try to use a part of the fees accumulated from the DAO fund to create protocol owned liquidity, focusing on the sICX/OMM pool for concentrated liquidity.