After being rigorously tested by early contributors and community members, bOMM implementation is very close to the finish line, and it is only waiting for governance discussion & approval at this point. Over the past few weeks, I have been giving a lot of thoughts about the future of Omm, especially around how we can collectively make it into a sustainable defi protocol as we may be entering a recession. Here are some thoughts I would like to share as we prepare for the bOMM launch and I would love to get others’ opinion on these matters:
Karma Finance (https://www.karmafinance.org/) by Protokol 7 (one of early contributors of Omm) will be launching soon. If Omm decides to work with Karma to enable Protocol Owned Liquidity, which we think will help longevity of Omm by owning liquidity instead of renting it, there is likely going to be some volatility in OMM price in the short term. Since Karma has not launched yet, I am concerned that many people in the ICON community may not be aware of the short term effect to the protocol such as Omm. Make sure to be aware of potential price volatility of OMM tokens that Karma may introduce before locking up OMM as bOMM for a long period of time. OMM can’t be unlocked once locked up as bOMM currently.
Once Karma is integrated with Omm, Omm will start to own more liquidity. As a result, there is less incentives for Omm to reward the renting behavior. There was no concept of Protocol Owned Liquidity when Omm launched, but with POL, it may make sense to start tapering off OMM emission for LP stakers. It may be worthwhile to start with 50% emission reduction for LP stakers and eventually end it entirely at some point if there seems to be enough liquidity after the emission reduction. If this direction works with LP emission, perhaps reducing the overall OMM emission or even getting rid of future OMM emission can be interesting options to explore over a long enough time horizon.
ICX delegation power clearly stands out as a killer utility of OMM and it is something early contributors and community can spend more efforts highlighting once bOMM launches. There are already several P-reps that are actively utilizing this utility (Gangstabet, IAM, Plan P, Fomomental, etc.). This utility becomes more interesting if OMM emission reduction mentioned above is achieved as there will be limited supply of OMM, and ICX delegation power will be diluted less as a result. Currently 1 OMM has a delegation power of ~ 1 ICX. 1 OMM is $0.023 and 1 ICX is $0.30, which means 13 OMM, which is equivalent to 1 ICX in terms of $ value, has control over 13 ICX. Several P-reps are providing incentives to encourage OMM holders to delegate to themselves. For example, Plan P and Fomomental are providing ICX rewards back to OMM delegators. Currently, 1000 OMM is getting OMM delegators 9.36 ICX for voting Plan P and 12.77 ICX for voting Fomomental on a yearly basis. At current prices, OMM is yielding 12 - 16.5% in ICX if you delegate to these P-reps. I think once bOMM is implemented, there will be less bOMM than current OMM staked, which means the yield can only be higher than what is currently being offered. I can also foresee more competitions from P-reps if this approach becomes lucrative for P-reps.
TLDR
Karma is expected to launch soon, so please be aware of potential price volatility of OMM tokens that Karma may introduce before locking up OMM as bOMM. OMM can’t be unlocked once locked up as bOMM currently. [EDIT]
Once Karma is integrated, reduce LP OMM emission to 50% and consider completely removing it if there is enough liquidity after OMM emission reduction
Prioritize promoting ICX delegation power of bOMM once bOMM launches
Hopefully these discussions and integration of bOMM & Karma will help Omm become a self sustainable defi protocol.
Thanks Daeki. Great post! I agree with all of the points except the first one. I don’t think the launch of Karma Finance protocol owned liquidity should be delayed. Regardless of market volatility, care needs to taken when committing to locking up assets for up to 4 years. Diligence will be needed regardless of market conditions. The key will just be to ensure users are clear in what they’re committing to. If this is clear on the UI and the information being put out there then it’s up to the end user to make the decision.
I definitely agree in reducing the OMM emissions and gradually further reducing them over time.
I also definitely think the voting power of bOMM should be highlighted as much as possible as it’s a massive strength of OMM
yep actually just heard back from Karma team that the launch is a little further away than expected, so agreed there that Karma launch should not dictate the launch of bOMM, and thus edited the post a little bit. Latest 1st point is mainly trying to raise awareness of Karma launch and its implications for OMM holders!
The governance voting multiplier that OMM offers is a unique value proposition for holding OMM. It has kept me in the platform, as I partially vote for the Gangstabet Node in order to receive their additional rewards on offer.
Agree with @Robi and @budw1ser. Personally, I think when it comes to product releases it should only be delayed if there are security risks and concerns. For other things we maintain objectivity and release when product is ready to go live, and leave it to educating the community.
And yes, boosted voting power should be actually marketed as a feature and maybe promote those Preps that share rewards to Omm voters.
For example, besides sharing some tweets, we could feature them in the UI like “Omm rewarding Preps” in the voting section and adding an ICX apy % or something like that.
Agree with the general sentiment that bOMM probably should not be delayed based on Karma dynamics. Agree with @Robi’s points. Probably makes sense to go slowly on Karma bond and not put too much downward pressure on OMM price.
Good points, thanks @oDK. I especially support reducing OMM emissions. And I support @Robi’s points that bOMM shouldn’t be delayed, primarily because long-term commitments won’t be affected.
Agree with the general sentiment that we shouldn’t delay bOMM due to potential market fluctuations. People locking up OMM for the long term are less likely to be influenced by short-term price action, and a cap on Karma Bond should alleviate the downward pressure.
Once Karma is integrated, reduce LP OMM emission to 50% and consider completely removing it if there is enough liquidity after OMM emission reduction
This point hasn’t yet been touched on, but if the OMM rewards are halved (and then potentially removed) for liquidity providers, we’ll need to decide where to allocate these rewards instead. Currently, 60,000 OMM is distributed to liquidity providers each day, with another 40,000 OMM put towards markets, and 20,000 OMM towards staking/Boosted OMM.
As Omm is a money market first and foremost, I think it makes sense for most of the OMM to be redirected towards the markets, as higher yields should stimulate more activity on the platform, with a smaller proportion redirected into staking rewards. Maybe a 60/40 split? Curious to see what others think would be the best approach here.
yep this can be an interesting implementation on the frontend. Also, it is likely that these yields are going to be higher when bOMM is implemented, so I am curious how it turns out in the end.
It seems like overall, people are eager to see bOMM implemented, so expect to see an official proposal soon!
There also seems to be an excitement around reducing OMM emission.
As Lisa pointed out, there needs to be a discussion around where 50% of OMM emission for LP and bOMM staking may go, and I would like to propose those be sent to the dao fund wallet. In my opinion, DAO fund wallet acts more like non circulating supply, so it will be taken out of circulating supply and thus not dilute ICX voting power. Karma integration will likely introduce new OMM tokens to the market from the DAO fund, and we just need to make sure there are less new OMM tokens introduced for Karma bond than what goes back to the DAO fund from LP/staking portion.
GangstaBet is rewarding their voters with CROWN token, which will be the GangstaVerse economy token. First use case will be to buy city blocks. This token however has not been distributed and hence isn’t trading and has no monetary value yet.
I strongly believe OMM holders are eagerly awaiting both bOMM and Karma’s POL to be implemented and once put to vote will easily pass.
Protocol Owned Liquidty (POL) in combination with diverting OMM inflation allocation from LP to DAO fund will remove a big part of the sell pressure on the OMM token.
bOMM will increase both OMM staking rewards and vote delegation power, benefiting long term OMM holders. Furthermore will it also decrease circulating supply and thus reduce sell pressure on OMM as well.
