When the DAO adds about 1/3 into the LP pool part of the emmissions will go back into the DAO.
Is your intention to lower the rewards twice, once from expanding the pool with DAO funds and hence taking a portion of the emissions, and then again from directly reducing it.
To me there are 2 different questions.
Using the DAO fund for POL. This naturally diverts some emmissions back into the DAO
Forget entirely about the DAO fund or POL, is the emmissions for LPs too high? its possibly yes its possibly no. But lowering emmissions will reduce total liquidity, independant of POL.
I think your arguments are sound for POL and would totally support that, but I don’t see any particularly stand out points to reduce allocations towards LPs. IMO in the current enviroment allocating them to suppliers or borrowers both will result in more definite selling.
Regardless, I like the POL idea in general, but really hope this vote is split into 2 different choices
As I mentioned in the first post, it would be good if Omm finds a way to cut down its cost (OMM emission) to reduce the selling pressure.
You are correct in that I am proposing to cut down the OMM emission twice by 1) using the DAO fund and protocol fee to diverts emission back to the DAO 2) reduce the total emission for LP providers.
I think Omm should try to slowly reduce the OMM emission for LP as it thickens its own POL with protocol fee and collaboration with Karma.
I would propose leftover 20K OMM/day to go to the DAO fund as the DAO fund won’t be selling those tokens to the market.
No this proposal involves using existing protocol fee (sICX for example) and matching it with OMM from the DAO fund to create liquidity. There won’t be sales of ICX to create a liquidity.
I am curious why you think it is not necessary to reduce LP rewards further? Wouldn’t reducing more LP rewards be better for OMM price stabilization?
The lower the yield gives investors less reason to hold OMM.
As stated previously OMM as minimal utility, minimal reason to hold it.
You will find a lot of the sell pressure is coming the borrowing and lending.
That may be to help pay off loans etc, however if the was a good reason to hold OMM. They may be willing to hold the OMM they earn from borrowing and lending.
If the omm reward for lp-supply is reduced as suggested, wouldn’t it be a factor for lp providers to exit? Of course, the choice of whether to stop supplying lp due to impermanent loss will remain, but if the supply of lp decreases, liquidity will not be maintained as expected.
That is where additional 800K liquidity from the protocol comes in. Even if 1/3 of LP providers leave because the OMM rewards emission is reduced by 1/3, the protocol liquidity will make up for it and stay at the similar level of liquidity while significantly reducing OMM emission.
What might be the consequences of adding 800m for liquidity AND not reducing OMM emissions for LP providers?
I am thinking that what will happen is that individual LPs will still get less emissions on their hands because the protocol will be a mega LP. That will result in more OMM accumulation for the protocol (that it won’t be sold but accumulated) and the free market should take care of the rest?
Does that make sense?
At the moment I am inclined to only add the ~800m liquidity and not reduce LP emissions.
Should the method to reduce the omm reward for providing lp be accompanied? If the number of lp itself increases, won’t the rewards given to the current lp providers decrease by itself even if the omm reward does not decrease?
Oh, There was already an answer saying that it was a protocol that came up with that in mind. ,Sorry
I personally think adding 800K liquidity and reducing OMM emission for LP providers will decrease the sell pressure more than just adding 800K liquidity.
If adding 800K liquidity and reducing OMM emission can accomplish the goal of having a similar amount of liquidity while reducing the sell pressure furthermore, why not go for it?
Off course, but at the expense of potentially scaring away normal LPs. I would just add the 800k liquidity and see what happens, probably the market will sort it out?
I actually disagree. I think with POL and less sell pressure, OMM is going to become more scarce to earn and people will start to sell less and less. I saw that OMM token price bounced back recently and think POL + OMM emission reduction will be a good start for OMM price to bounce back.
I think that OMM intrinsic value has to be discovered by the market, when you hold and stake OMM you are holding a peace of the protocol + voting rights + an ICX voting mega booster, in the near future you would also be holding a multichain money market, that’s a lot of value in my opinion.
The fact that OMM does not pay you to hold it it’s not that bad from a long time horizon stand point. It means the DAO is collecting a lot of money that does not end up on holder’s hands, hence it compounds back into the business. This is why Warren Buffet is not a huge fan of dividend paying stocks.
In fact BALN price is not doing great (I also hold it) and Balanced offers a nice return.
I don’t want to drive the conversation too much away, just want to share my thoughts on why OMM price should not be the main focus, although I do like the idea of bOMM to reward long term holders.
Having said that I think we all agree that POL makes sense, so why not starting there and then deciding if we also need to lower LP emissions (wich I don’t agree at the moment because we would “scare them away”).
TLDR: We shouldn’t make protocol decisions based on the token price. POL and bOMM are good ideas in my view.
To be honest, since the number of tokens issued by Omm itself is very large, I think the downward pressure is an expected result. Under these conditions, there is no doubt that pursuing two complex compensation limits will be effective as this proposal is proposed to slightly alleviate the downward pressure on the price.
Nevertheless, I would like to ask, how about re-voting for Result 2 after implementing Result 1 first and then seeing the progress rather than making these changes all at once?
I do think POL is a good mechanism in general. Perhaps it is a good idea to start off with POL with the protocol fee + OMM Rewards, monitor LP activities, and consider reducing OMM rewards for LP portion after a while?