This proposal aims to replace the gOHM Vault and add OHM as a new collateral type on Vesta. Olympus is building OHM, a community-owned, decentralized and censorship-resistant reserve currency that is asset-backed, deeply liquid and used widely across Web3. Additionally, Vesta would benefit from the increased diversity of supported assets and attract OHM holders for TVL growth.
Diversification: Adding OHM to our collateral pool provides diversification and also helps to mitigate risk and increase the stability of VST.
Deep Liquidity: OHM has over 5m in protocol owned liquidity deployed on Arbitrum, enabling efficient vault operations, such as repayments and liquidations. This also puts OHM in a great position to increase the efficiency of VST through direct pairs or pairing with FRAX to open up routing through the existing VST liquidity on Curve.
Strong Backing: At the time of writing, OHM has a $220m treasury with over 185m of liquid assets backing OHM supporting OHM via the RBS system. This makes OHM one of the most reliable assets in crypto.
Deprecation of staking: The staking rate of gOHM will be reduced to zero in the coming months, making it an inferior collateral compared to OHM (see below).
More secure and versatile collateral: OHM is native on Arbitrum enabled by cross-chain messaging via LayerZero, making it more secure and versatile than gOHM which is a bridged synthetic. OHM can be bridged to and from Ethereum instantly with zero slippage fees.
OHM and Olympus
Oracle (Chainlink): https://data.chain.link/arbitrum/mainnet/crypto-usd/ohmv2-usd
Olympus Website - https://www.olympusdao.finance/
App Interface - https://app.olympusdao.finance/
Documentation - https://docs.olympusdao.finance/
Github - OlympusDAO · GitHub
Audits - 1st Audit (Peckshield), 2nd Audit (Omniscia)
Governance - Scattershot (fork of Snapshot)
Community Discord - Olympus
DAO Discord - Olympus DAO Server
Twitter - https://twitter.com/OlympusDAO
We’d like to invite Warden Finance to provide us with the following parameters:
- Minimum Collateral Ratio
- Debt Ceiling
- Liquidation Penalty
- Vesta Reference Rate Category
As with any cryptocurrency, integrating OHM as collateral carries specific risks. However, these risks can be mitigated through proper risk management practices and the proposed parameters:
Smart contract risk: Olympus protocol’s OHM token has undergone multiple audits with no critical issues found. However, as with any DeFi protocol, there remains a risk of unforeseen smart contract vulnerabilities.
Counterparty risk: As of now, the Olympus protocol has a large number of OHM token holders, indicating widespread distribution and usage. The protocol is governed by the decentralized Olympus DAO, mitigating single point of failure risks.
Market risk: OHM is subject to price volatility, as with any cryptocurrency. However, volatility has been greatly reduced since the implementation of Range Bound Stability with a 30-day volatility of under 1%. Additionally, a proposed liquidation ratio of 150% and a starting debt ceiling (to be determined based on liquidity depth) should provide adequate protection against typical market fluctuations.
This poll/discussion period will be live for a week and if passed, the official voting will commence immediately and will take place over three days.