Usage of protocol fees and protocol-owned liquidity for the Recovery Fund

Proposal discussion
#1

After some more thorough analysis on the latest oToken and dToken balances, the outstanding losses are currently valued at $1,957,757:

4,000,226.69 sICX
355,258.38 IUSDC
339,206.61 USDS
263,237.06 bnUSD

Note: this assumes all recoverable sICX and IUSDC has been returned (IUSDC is still being processed), and doesn’t account for the Omm Recovery Fund.

To reduce the losses suffered by Omm users, the early contributors would like to propose sending all of Omm’s protocol fees and protocol-owned liquidity to the Recovery Fund. Excluding OMM, the protocol’s holdings are currently valued at $213,957:

100,705 sICX
66,500 IUSDC
82,714 USDS
39,034 bnUSD

Omm also holds close to 100M OMM in the DAO Fund and as protocol-owned liquidity, which represents $700K at the current price ($0.007). This would still leave a $1M outstanding loss, so the early contributors are brainstorming ways to utilize the OMM to provide the best outcome. We welcome any and all ideas from community members.

4 Likes
OIP 16: Usage of protocol fees and protocol-owned liquidity for the Recovery Fund
#2

Hi guys,

in youre recent tweet you ask for advice what to do with the 100 million Omm (700k usd) in the Dao. Well that’s really difficult to say in this situation without knowing what The Foundation is going to do. I said in Discord a fair and reasonable solution for me would be if: Omm raises 500k, The foundation donates 500k and gives a loan of 500k and the community loss is also 500k. ( or numbers like that). In that case you could use the Dao to come to the 500k and have some meat on the bones after this all.
But if The Foundation is going to do nothing (which i can’t believe) then you should use close to all of the Dao to reduce the loss of the community.
The primairly goal should be to reduce the losses of the community as far as possible.

I think that usage of the protocol fees and POL for the recovery fund is a good first step to do. The discussion/decision what to do with the DAO should come after youre brainstorming sessions with The Foundation have ended. It is too soon now to make a decision about that kind of money.

The decision what to do with the DAO should be the last step in the proces when everything is clear. First we need to find out how much funds come back, how the Foundation will help etc.

1 Like
#3

Hey all,

First off all I think it is a great idea to utilise the protocol fees and liquidity and send them to the recovery fund. I think this is an important step that shows the willingness to minimise the losses for everyone.

Regarding the DAO Fund I think it is a bit more tricky. At current price it represents $700K, but if this hit the market I expect the value would decrease rapidly. Maybe a good way to use the DAO Fund would be by compensating users with bOMM. If we lock the OMM for 4 years and distribute the bOMM this may have a couple of beneficial side effects as well. for instance:

  • We keep users involved as they now own a part of the business, whereas many may otherwise just leave the platform after what happened
  • The protocol fees of the coming 4 years will pay-off some of the losses.
  • A large part of the supply will be locked away and won’t hit the markets, hopefully helping to reduce sell pressure which I expect is inevitable after what happened.

Well these are my initial thoughts, I am curious to hear what other have to say. Also I agree with jeroennn040 that these step could be taken after the brainstorming with the Foundation ends. However, I would expect the Foundation to only step in if Omm first utilises all the means they have to compensate users themselves. So I expected we will need to use the DAO Fund in each scenario.

1 Like
#4

Hi DGO,

With youre idea that we can’t sell the OMM and destroy the price i totally agree. I was not talking about this because i first wanted to know what the Foundation is going to do. Giving 4 year locked Bomm to the community is a great idea. When you vote to a p-rep with incentives you can make back a great part of youre money.

It’s a real difficult situation because you want to keep as much as possible in the DAO and on the other side compensate the community as much as possible. The biggest factor in this decision is The Foundation what are they going to do and what do they expect from us as a community and of OMM.

2 Likes
#5

Hi DK. Thanks for the breakdown in numbers and opening this discussion. I’m in support of sending the protocol fees and POL to the recovery fund. Regarding the DAO fund, I agree with what @jeroennn040 has said. It may be best to first see how much funds can be raised not taking the DAO fund into account. Having a DAO fund is important but this is an exceptional case so let’s see how much can be raised elsewhere before deciding on how much of the DAO fund we intend to sell. I’ve heard that talks are ongoing with the Foundation but I definitely don’t feel they’re obliged to provide to the recovery funds. If they did it’d be amazing but I understand this is entirely at their own discretion as they can’t be expected to get involved any time (if) a hack occurs in the future

#6

I am definitely in support of the proposal. In terms of the dao fund, I’d echo the same sentiments shared by @budw1ser and @jeroennn040 in that we should look at deploying dao funds to the recovery fund as a final resort. Once we get a clear picture of what the final figure in the recovery fund.

#7

Hey guys,

Thanks for sharing all your inputs here. I agree that it would be best to consider different options for the DAO fund after we have a better understanding in the remaining losses. Some community members have brought up how many OMM the protocol owns for the recovery purpose, so wanted to open up a discussion in general and we have some good ideas here it seems like. Early contributors are also in conversation with multiple parties to see what can be done to minimize the losses for the community.

For the time being, I will go ahead and put out OIP to send the following amount to the recovery fund from the protocol fees and PoL.

100,705 sICX
66,500 IUSDC
82,714 USDS
39,034 bnUSD

#8

As an additional compensation, some of the 100M OMM tokens the DAO fund holds could be distributed to suppliers in a monthly basis during several years.

Benefits:

  • Slow payouts shouldn’t affect the price too much.

  • Incentive for people to stick around the platform.

  • The protocol would have time to rebuild it’s holdings.

  • Locking OMM could help affected suppliers to get some capital back by locking and voting for paying nodes.

Cons:

  • This will affect people that is in high risk of liquidation.

  • The slow payouts will affect people who is in financial stress.

  • Suppliers should accept long term volatility (for the good and the bad).

Conclusion:

This idea would be not so hard on the protocol and it will potentially benefit those who believe in Omm’s future, but it won’t be a great solution for those looking for a quick fix.

Personally I would be comfortable with something like that, as I understand what happened to Omm is a constant risk in Defi. For me it all come down to what’s best for Omm image going forward.

(I am a supplier, and I plan to keep supplying).