An outlook at the turn of 2021
This past year was all about OHM. This next one is about the econohmy.
Disclaimer: these are my thoughts and opinions. They may not be representative of others.
In the past nine months, we launched — no small feat in and of itself. We introduced new dynamics, chief among them protocol asset ownership, which has changed the course of DeFi protocols. We’ve bootstrapped a gargantuan warchest, filled with strategically valuable assets that allow us to wield immense influence. And most importantly, we’ve built one of the most kick-ass communities on the internet. As I see it, we have constructed a wide base. It’s time to build out.
Think about this like building a house: before you can do anything, you need a foundation.There are two ways to go about it.
One option is to go narrow; this takes less time, allowing you to quickly start constructing floors. It does not take long to see the house come together; short-term, very satisfying. However, you are permanently limited to that base. Build too tall, and the smallest gust may knock you over.
The other option is to build wide; this takes longer, and defers the sense of accomplishment you get from visible progress. However, a wide foundation lets you build big and tall, and remain resilient to forces that would otherwise topple you. We have taken the route of delayed gratification, and while it may feel slow, we will reap the benefits for years to come.
What we are building
I’ve come to realize that we’ve left an implicit piece of this whole puzzle somewhat unsaid. We are trying to build a currency, but that also means we are trying to build an economy. The former cannot exist without the latter. More specifically, we want to build the greatest digital economy in the world.
How do we get there?
A circular economy
Long-term, this is by far the most important. The more goods and services you can buy and pay for with your OHM, the better. The goal is, and has always been, that you never need to sell your tokens; instead, you buy things with them. The guy you buy things from also doesn’t sell them, but uses them to buy things from someone else. This is how real currency is used. Yes, it’s a nuance (buying something with OHM versus selling OHM for something are technically the same action), but it’s an important and meaningful one.
Right now we have primarily targeted purchasing utility in the form of markets (the most DeFi-native route). We want to develop a network of liquidity pools, allowing Ohmies to trade and invest directly with their OHM. OHM > ETH > TOKEN bad; OHM > TOKEN just fine.
Another way is through NFTs. I remain excited about Odyssey and Ohmiesea (devs, wen?!). Sudoswap is another one that will allow you to trade your beloved bears and other Ohmie art directly with your Ohmies, with and for OHMies.
One more that I would like to see pursued in the coming year is payment services. I am struck with the fact that, to date, there are still shockingly few (none as far as I know) crypto payment services with user experiences comparable to trad-fi equivalents (venmo, square). I believe that we are uniquely positioned to bring traction to such a product, and I hope (and will do anything I can) to see this develop in the coming year.
That is, however, why Tyche (Olympus Give) excites me. Though it has debuted in a relatively niche use-case (charitable donations), that product is an entirely new payment streaming primitive based around yield direction and primarily enabled by the unique properties of OHM/sOHM. Props to indigo and the Tyche team for coming up with this, and I can’t wait to see where you guys take it in 2022.
We want to produce things that people outside of the econohmy want, so that their external capital comes into our economy. Capital flows are self-reinforcing; the more flows into an ecosystem, the more other ecosystems dry up and the more continues to flow into the stronger ecosystem. The crypto analogy is that winners continue to win, while others may struggle to see more than momentary success.
Currently, our greatest export is OHM. Before you cry foul, I would like to point out two things. 1) There is nothing wrong with demand for good money/currency. There’s a good argument to be made that this entire industry is based upon that phenomena. 2) Our good friend USD, the sitting incumbent reserve, has the same dynamic. Here’s a great thread that talks about this (in addition to the potential role of CBDCs and stablecoins in the future of finance):
Creativity generates things that people want. Web3 is a potent demonstration of this. This is why I place such importance in community. Creativity is self-reinforcing and in many ways a network effect; those surrounded by creativity will be more creative, and as a result those around them will be more creative. Let’s try to maintain good vibes, and support and celebrate each others creations. Empower each other to pursue and succeed, and we all win.
Finally, we want a robust treasury of reserves backstopping the econohmy, because the reality is it’s not always easy. It never has been, and at least right now it honestly shouldn’t. This remains a high-risk, speculative endeavor. We are truly shooting for the stars here, and there’s no guarantee we make it there. Does that mean we shouldn’t try — hell no. But, it is good to acknowledge.
That said, this is where reserves really come in. If I can synthesize the value of the treasury into one sentence, it would not be that it generates x per week, or sustains y days of runway, etc. The purpose of the treasury is to ensure that wealth always exists at Olympus. My understanding is that, based on that simple fact and barring calamity, we are really just waiting for the inevitable.
That is because this de-risks the econohmy. If you are a project founder, and you are considering building on OHM/with Olympus, your chief concern is going to be that this requires a bet on our success. This is the case for any economy, digital or real-world. The insurance of sustained value (even if its not today’s value) de-risks the equation, brings the builder in, and makes it more likely that the next guy facing the same question makes the same decision.
Who we are building with
2021 provided me with the opportunity to meet so many incredible people. It has been humbling and awe-inspiring to see so many gravitate toward and adopt this simple idea of a functional currency owned by its users. The Ohmies are truly mi famiglia, and though there’s so many of you now that I have not had the chance to meet, I am grateful to share a group with you.
That extends to builders. We’ve been able to collaborate with some incredible projects, founders, contributors, anons, and other participants in this crazy industry we call DeFi. Let’s double-down on the cooperative mindset that drives us forward. (3, 3) is more than game theory. It has become a mindset, a lifestyle; a rejection of the belief that all actors will behave based on greed at the expense of each other in favor of the interpretation that, given the opportunity to reap the same benefit mutually, they will. This is such a powerful concept, and it can transform far more than DeFi. Collective action can, does, and will change the world.
On that note, I do want to address the fact that it has not been smooth sailing across the board. We’ve had our fights and disputes; drama has been stirred, and beefs have been started. I encourage you to leave it in the past. Catalog it as an experience, learn from it, and move on. Grudges help no one; I would strongly argue that they are actively harmful. We want to build with a positive mindset, with the intent of improving things for ourselves and each other; the goal is not to tear others down.
Now, for the fun part.
Some predictions for 2022 and beyond
I will reiterate that this post is opinion-based and, especially from here, speculative. Take it with a grain of salt; I have no crystal ball.
Olympus V2 bonds will kick off the year. This will provide the foundation for some remarkable new utilities and abilities that were not possible to date.
V2 bonds add a far greater level of precision and automation to bond operations that lend themselves to distribution of control. I predict that within the first half of this new year, OHM holders will actively and directly control the rate and composition of the majority of all treasury bond inflows.
Olympus Pro V2 will launch, introducing the same new mechanism as V2 bonds in a permissionless format. It will be adopted and ultimately compared to the advent of x*y=k decentralized exchanges (maybe not quite as big, but we can dream). Use cases will range from protocols acquiring liquidity to funds and whales accumulating and distributing positions. New markets will form with Olympus Pro at their core. New products will launch that cater to those markets.
Olympus Pro will put power in the hands of builders, allowing them to rapidly bootstrap new products that are not undermined by mercenary capital. Sustainable, powerful protocols will arise, offering services that previously seemed impossible.
Fungible and non-fungible bond tokenization and integration will be a trend for the year. Secondary markets will form, compressing bond yields for protocols utilizing their infrastructure. This will expand the efficacy of the model by reducing cost and expanding access.
Multiple projects will launch and compete to manage the liquidity of protocols such as Olympus. These projects will recognize that the goals of their protocol customers may exceed, or even overshadow, the desire for pure fee revenue that characterizes most third-party LPs. They will run catered strategies to target the market behavior most desirous to the protocol they are working with.
Olympus will begin to run two-way market operations, facilitated by V2 bond infrastructure. The additional volume and liquidity will make OHM’s market among the strongest in the space.
We will see one or more primarily OHM-backed stablecoins/debt tokens enter the arena. Leveraging Olympus’ ability to generate demand (through bonds) and liquidity (through OHM pairs and CVX, CRV, FXS, BTRFLY, and TOKE holdings), they will grow to become a serious contender in the decentralized stablecoin market.
These stablecoins will reduce Olympus’ cost of debt, allowing for greater and more sustainable expansionary periods. Olympus backstops and debt ownership will extinguish tail-risk scenarios, making these stablecoins some of the safest in the industry.
Several incumbent stablecoins will integrate OHM as a collateral, leveraging its intrinsic value to diminish systemic risk. Debt will move away from Fuse, but new Olympus use cases will be developed using their permissionless markets.
A new decentralized exchange will launch, catering primarily to protocols that own their liquidity. Prominent among them will be Olympus. This exchange will serve as a bastion for new projects in the space. The Olympus DAO will help those projects leverage Olympus Pro and bond tokenization to efficiently and powerfully attract capital and liquidity where it is needed.
Olympus’ collaborative ethos will persist and thrive. The next generation of DeFi protocols will associate in some form. Olympus will reduce barriers to, and expand benefits of, collaboration. By end of year, allocation of resources towards partners will be placed onto real-time token-based mechanisms, allowing aligned protocols to gain the favor of the Ohmies and trustlessly reap the benefits. This will combine bootstrapping and community building into a single endeavor centered around the Olympus treasury and community.
The DAO will accelerate the growth of Olympus’ economy. Grant and incubation programs will be leveraged to help new projects get off of the ground and find their place in the market. New pipelines will be built to help builders of projects, new and existing, source investment capital, talent, advice and community. The DAO will continue to embrace the spirit of (3, 3) and seek to expand collective benefit wherever it is involved. I believe there is a non-zero probability that the formal DAO is actually smaller at the end of this year, but I would be surprised if its’ sphere of influence, and the value generated and contributed to our ecosystem, does anything but grow.
Use as a reserve
Utilization of OHM as a reserve currency will continue to expand, especially at a protocol level. Improvements to market infrastructure (through V2 bonds, liquidity management, stablecoin offerings, debt facilities, and more) will increase its real and perceived safety as an asset, allowing it to permeate further into activity on DeFi and across chains.
Use in culture
Ohmie culture will continue to spread. New creative projects will launch catering to the community. Art, music, literature, memes, and other creative media will be generated and consumed by Ohmies at an increasing pace. (3, 3) will continue to infect the world.
How this comes together
The introduction of market operations make it clear that Olympus’ treasury can directly influence and backstop OHM’s market. Bank run concerns will diminish after being tested, creating tailwinds moving forward.
V2 bonds start the Olympus wars, in which ownership of OHM allows holders to direct demand itself (similar to CRV directing stablecoin liquidity).
Composable bonds create sinks for bond emissions, compressing cost of capital and increasing the impact of bond directing. Market operations and liquidity managers mediate the impact of those activities, ensuring a safe and consistent market. Native stablecoins reduce the systemic cost of debt, reducing drag and relinquishing dependence on third-party lenders.
Significant ownership in a DEX allows us to direct our positive externalities in a maximally beneficial manner. Debt mechanisms enabling third-party OHM LP’s allow us to convert the biggest pools in the space into OHM pairs. Olympus Pro allows other projects to adopt these dynamics, and we will successfully push for many of them to accumulate OHM for their liquidity pools through those programs. OHM will be the lowest cost-of-capital asset available.
The DAO nurtures key new projects entering the arena. They help founders connect with the broad Olympus community, as backers, investors, and users. Building in the econohmy provides a competitive advantage that allows these projects to succeed at greater rates than the industry norm.
Community-driven bond direction creates a treasury full of strategically advantageous assets, which are also directed by token holders. OHM becomes the single most useful asset in the industry. With it, you can direct not only demand, but the outcomes of every decision made by a protocol in which Olympus has a stake. All value will begin to flow to and from OHM. Olympus serves as the hub of activity throughout the DeFi ecosystem. (This one probably takes longer that a year).
What’s it all for?
I believe that our driving principal should be to create the most frictionless and welcoming digital economy in the world. We should strive to enable radical ideas to become reality. Through this, Olympus (itself a radical idea) becomes a reality.
At the end of the day, the goal is to improve the lives of those inside and outside of the Olympus community. We want to be a force for good; to make a positive impact in the world. While I do not believe such acts should be coerced, I do think they should be encouraged. This is an extension of (3, 3), a belief that helping those around you helps society succeed, and helps you succeed. I think that any action made in that spirit is a net positive, no matter how big or small.
On a personal note
You may or may not notice that I do not feel the need or desire to constantly hammer on these ideas. Many have asked me to, and voiced their disdain that I do not (especially when times get tough). Here’s the thing: I will not beg you to support us; in fact, I’m far more likely to laugh if you bet against us. At minimum, spite can be a hell of a motivator. However, it is because I simply have conviction in what is being built, and who is building it. You should too, or you should not be here. I said it the day we launched; this path is not easy.
That said, I know I can do better to communicate. I’ve placed it at the top of my list of resolutions for this year. At times, especially when everyone is caught up in the minutia and the chaos of the day, it proves difficult to put the bigger picture into words. Plus, I am simply not the guy to look to to rile up the masses and generate hype. But, I should try harder and I will. Still no demagoguery though, sorry. Consider me a supporting actor in all of this, coaching and cheering us all along. I think Vitalik sets a great example for how such a role should be filled.
As I said before, I believe the greatest determinant of our success will be the econohmy that forms. Community growth, treasury growth, at the end of the day they all serve that end.
With that, if you want to help it come together but don’t know where to start, here are some project ideas. In most cases, I’ll be happy to help where I can. However, I may pursue some myself, so if we overlap be ready to compete :)
- Develop liquidity strategies that cater to protocols that own liquidity. End users only care about maximising profits; protocols have different desires. Whether you are a stablecoin or a wannabe currency, the purpose of holding liquidity is more than earning fees. Providing services around this will make $.
- Build asset management strategies for protocols that own assets.
- Build strategic funds for protocols that own assets.
- Create an NFT market that uses OHM (low hanging fruit, probably lots of volume).
- Create yield division products to provide OHM leverage and fixed income in one (to different users).
- Anything that can be done with yield products, using OHM.
- Anything that can be done with leverage products, using OHM.
- Anything that can be done with fixed-income products, using OHM.
- Anything that can be done with liquidity products, using OHM.
- Wield OHM and DeFi to help people:
⁃ Get connected to the internet.
⁃ Train to pursue a career.
⁃ Use our financial system as their financial system.
I’m spending the next year thinking about the econohmy. 2022 is about doubling down on supporting and lifting up those that push us all forward. It is about putting together the pieces and making Olympus the best ecosystem in Web3, agnostic to chain or tribe.
2021 was a hell of a year. It’s going to be hard to top. But I know we have it in us.
Let’s get it.