Growth DeFi joins the first Avalanche Cohort of Olympus Pro
Growth DeFi has joined the first Avalanche Cohort of Olympus Pro. This post will detail why we have decided to go with Olympus Pro vs. implementing bonds on our own, and what Growth DeFi will be using bonds for going forward.
On December 1st there will be three bonds added to the Olympus Pro Avalanche Cohort:
GRO/MOR TraderJoe LP Tokens (Get GRO)
You will be able to provide this LP token and get GRO in exchange.
GRO is the governance token of the ecosystem and has ownership of the surplus generated by MOR.
MOR is an overcollateralized stablecoin. It is currently backed on Avalanche by xJOE, TraderJoe LP tokens, and jTokens (deposits on BankerJoe). All of these tokens are yielding collaterals.
The current global collateralization ratio of MOR is 185% which means that for every 1 MOR in circulation there is $1.85 worth of collateral backing it.
The purpose of the GRO/MOR bond is to acquire protocol-owned liquidity for GRO. This bond will be allocated 20,000 GRO per month.
WHEAT/MOR TraderJoe LP Tokens (Get WHEAT [AVAX])
You will be able to provide WHEAT/MOR LP tokens and get WHEAT (AVAX) in exchange.
WHEAT is the incentives token of the Growth ecosystem. Going forward its focus will be on deepening the liquidity of MOR and acquiring different yield accruing tokens that increase the value of WHEAT’s treasury and the backing per token. Olympus Pro bonds will be used for this purpose.
For the first month, this bond will be allocated 70% of the WHEAT (AVAX) already reserved for bonds (approximately 25,000 WHEAT [AVAX]).
Remember that 2/3 of all WHEAT AVAX emissions are reserved to fund Olympus Pro bonds. This accounts for 2,000 WHEAT (AVAX) per day.
MOR/AVAX TraderJoe LP Tokens (Get WHEAT [AVAX])
You will be able to provide this LP token and get WHEAT (AVAX) in exchange.
To make MOR the most liquid and tradeable stablecoin we need to make sure that it can be swapped directly for the main assets on each chain. The first of these bonds will be MOR/AVAX, and we are looking at more to follow including:
For the first month, this bond will be allocated 30% of the WHEAT (AVAX) reserved for bonds (approximately 11,000 WHEAT [AVAX]).
GRO and WHEAT Bonds
The time has come for Growth DeFi to start owning its own liquidity instead of having to rent it by paying continuous incentives to external LPs to not leave the pool. This provides many benefits including:
- More liquidity depth for buying and selling GRO and WHEAT
- Reduced sell pressure from LP farms
- Increased MOR in circulation
- Extra protocol profits from swap fees
- Reliable liquidity regardless of market conditions
The GRO DAO currently has a treasury holding of approximately 150,000 GRO. The aim of bonding is to create as much liquidity depth for GRO as possible.
Since GRO doesn’t have any emissions (it’s a purely deflationary and value-accruing token), this treasury can be used for many purposes. The main purpose is to acquire GRO/MOR LPs, starting with GRO/MOR TraderJoe LP tokens on Avalanche.
Bond buyers will be able to buy GRO with their GRO/MOR JLPs.
Throughout the coming months and years the majority of the 150,000 GRO will be converted into liquidity across different chains starting with 20,000 GRO for the first month to acquire GRO/MOR liquidity in TraderJoe (Avalanche).
As the DAO-owned liquidity increases, the need to incentivize pairs such as GRO/AVAX will disappear. This means emissions can be redirected towards increasing the staking rewards of WHEAT AutoCompounding and govGRO staking vaults, thus creating a ‘win-win’ situation for both.
Swap Fees from these LPs held by the protocol will also increase GRO’s revenues.
WHEAT is in a very unique position to really capture the most value by combining bonds with its EBCs (Exponential Buyback Collectors). These EBCs will help WHEAT to continue being the only sustainably deflationary farming token in DeFi. WHEAT will rely on bonds to enable it to acquire any asset, put the asset into an EBC with a customized strategy, and then use its yield to buyback WHEAT.
WHEAT bonds will start simply on Avalanche and will then evolve into much more over time.
For the first month of bonds being live, bond buyers will be able to provide either WHEAT/MOR JLPs or MOR/AVAX JLPs. The majority of the WHEAT allocated to bonds for the first round will go towards accumulating WHEAT/MOR liquidity.
Once enough WHEAT/MOR liquidity has been acquired the WHEAT/AVAX incentives will be completely removed. These incentives will then be carried over to WHEAT’s AutoCompound pool; almost doubling its staking rewards.
Having a huge WHEAT/MOR liquidity position will allow the protocol to eat up any dips with its own liquidity and even profit from them through swap fees.
The future of WHEAT bonds doesn’t just stop at acquiring WHEAT/MOR and MOR/AVAX liquidity though.
WHEAT has most of its emissions allocated towards bonds. This continuous stream of emissions will enable the protocol to substantially boost its existing EBC holdings and promptly increase the burn rate of WHEAT.
As an example, in future rounds, WHEAT bonds can include the accumulation of AVAX as a long term holding which can be maximized through yield farming with the EBC contracts.
Bonds won’t just be for Avalanche either. We are proposing to start reserving 1000 WHEAT BSC per day (slightly over 1/3 of emissions on BSC) towards creating a large bond reserve by the time they come live.
In future chain deployments, such as Fantom, the WHEAT token of each chain will also have at least 2/3 of its emissions dedicated towards bonds.
For more information on why bonds will improve Growth DeFi’s Ecosystem you can refer to this other post.
Why Olympus Pro?
There have been several reasons for choosing Olympus Pro vs doing bonds on our own:
- Olympus has done over $800 Million in bond volume. They know the ins and outs for bond configurations. Many of the so called “ohm forks” have lost millions of dollars in opportunity cost for having the wrong parameters or simply ‘copy paste’ thinking that the token type doesn’t matter. This alone pays the fees from Olympus Pro multiple times over.
- Olympus holds the tokens it collects as fees. This will increase the decentralization and voter base of GRO’s DAO.
- Onboarding the Ohmie community to our ecosystem.
- Opens the path for further collaboration.
We will be using Olympus Pro for everything going forward; not only for acquiring protocol liquidity for our ecosystem tokens but also to acquire different collaterals which can generate a return for the WHEAT Treasury.
For future launches if Olympus Pro exists in that chain (such as in Fantom) we will be using it for WHEAT bonds from day one. This ensures a constant stream of emissions into Olympus Pro bonds.
If we’re live on one chain and Olympus Pro isn’t live there yet we will integrate with it as soon as it launches there.
There is a lot more to come for the Growth DeFi ecosystem including revenue-sharing for protocols holding MOR in their treasury.