Thunderous Partnership with Olympus Pro Goes Live
Dear Friends and fellow Ludwigs,
As you know by now, we went to Mt. Olympus to hang with the big guy Zeus. We brought along The Degen, Beetrix and some Ludwigs and we had a thunderous time. Zeus knows how to party, almost like that one time in Vienna….
We went to bond with an old friend but also to secure a sweet deal. The Ludwig community recently voted to participate in a partnership with OlympusPro to gain DAO Treasury owned liquidity and the time has now come to put the theory into practice.
AT 18.00 UTC Monday 17th of January you can exchange A Late Quartet liquidity token (FTM-USDC-ETH-BTC) for BEETS using the process of bonding on Olympus Pro.
To get involved with using bonds you can follow this simple process (also mentioned further down in the article:
Step 1. Check out the bonds marketplace on OlympusPro.
Step 2. Connect your metamask to the server.
Step 3. Select the Late Quartet bond pair and click bond.
Step 4. Claim your rewards and receive some BEETS.
Remember: When the displayed ROI is negative, you may not want to bond as it will be cheaper to directly buy BEETS using the underlying assets.
For those of you that want to dive into the music theory behind Olympus pro and the benefits of bonding. We have written some lines of music for you below, feel free to indulge.
This article will take a look at:
- Why bonding came about.
- OlympusPro as a service and the benefits of bonding as an alternative to traditional liquidity mining.
- How to get involved.
Why bond in the first place?
Let’s take it waaaaay back to the summer of 2020. Defi is “hot” on the scene, a bunch of development is going on and things are really starting to pick up. Compound introduces their governance token to reward its users and liquidity mining is born. Other protocols across the cryptoverse catch on, yield farming becomes a thing and defi activity skyrockets.
This boom in the defi ecosystem supported a lot of innovation but it also highlighted some of its major shortcomings: Liquidity Mercenaries.
Liquidity mining has proven to be a popular method to incentivise users for a given protocol however in some cases it has come at a fatal cost.
From the perspective of the humble yield farmer it provides the opportunity to make a quick buck as they search for the next best “crop” to harvest. For the protocols however, this creates a tendency for capital to leave the project as the incentives dry up due to the farming activity. On top of this comes a double kick to the head as the tokens that have been farmed are often sold off into the markets as soon as they have been earned.
If you’re into crypto for the short game this is great, I mean who cares right? Well, we do.
For emerging projects, the search to provide sustainable liquidity is crucial for long term success. Not just for the sake of their own well being but for the ecosystem as a whole — a stable environment allows the community to thrive.
This can be achieved in a number of ways but for the sake of this article we will be taking a look at OlympusPro and protocol owned liquidity.
What is OlympusPro?
OlympusPro is a service offered by OlympusDao for partner protocols to buy their own liquidity.
Instead of staking liquidity provider tokens (LPTs) for farming rewards, users can exchange LPTs for a protocol’s governance token at a discounted rate through a process called bonding.
For a quick summary — Bonding is a mechanism in which a user can sell assets to a protocol in exchange for its native token.
The user is incentivised to bond, instead of buying on the market, by the protocol exchanging their token at a discounted price (5–10%). The token is usually vested over a period of time to prevent an immediate arbitrage opportunity. By bonding tokens users receive the governance token at a better price and the protocol gains ownership over the exchanged token.
This offers an alternative to the traditional liquidity mining process and is innovative because instead of “renting” liquidity through incentives, protocols can buy and own liquidity by using bonds.
The infographic shows the differences between liquidity mining and bonding. Liquidity mining optimizes short term liquidity while bonding promotes long term permanent liquidity. Source: Messari.
Let’s look at our partnership with OlympusDao as an example:
Through OlympusPro, users can exchange A Late Quartet liquidity token (FTM-USDC-ETH-BTC) for BEETS through the bonding process.
The amount of BEETS received is determined by the value of the BPTs exchanged
The bonding of the BPTs takes place over a period of 5 days at the end of which the user will receive BEETS at a discounted rate compared to the market value
BEETS will be released linearly over the vesting period and will be claimable in segments during the bond or in full when the bond is complete
N.B — The ROI is subject to change as demand for the bonding pair increases
The BEETS used in the bonding are taken from farm emissions on the Beethoven X protocol
At the end of the vesting period Beethoven X obtains ownership of the BPTs provided in exchange for the bonding process.
This is beneficial for the user as they obtain BEETS at a cheaper price and it is also beneficial for the protocol as they gain ownership of the supplied LP token.
What are the Advantages?
The most obvious benefit is that protocol owned liquidity bypasses the need for external liquidity providers. This means that a protocol no longer needs to “rent” its liquidity to incentivise other users and can now make use of the owned assets.
For the user the advantage lies in obtaining a token at a cheaper price.
Another key benefit is that the protocol can diversify its treasury which provides financial stability and sustainability.
Protocol owned assets in the treasury can be put work in a couple of ways:
- Provide liquidity to liquidity pools and receive transaction fees.
- Invest the assets to earn a return.
In essence the more liquidity owned by a protocol the more sustainable its treasury should be.
This is favorable for the protocol and the community as profitable investment decisions can be made by the protocol and as a result better/sustainable incentives can be offered to the community.
How can you get involved?
The bonding process can seem a little complicated at first but once you get a hang of it it’s pretty simple.
Step 1. Check out the bonds marketplace on OlympusPro.
Step 2. Connect your metamask to the server.
Step 3. Select the Late Quartet bond pair and click bond.
Step 4. Claim your rewards and receive some BEETS.
OlympusDao has released a short video guiding the user, step by step, through the entire process.
For any further information you can reach our community through Discord or on Twitter. We are always happy to help.
The Beethoven X bonding option will be up and running Monday 17th of January on OlympusPro.
We hope you found this piece valuable and remain at your service to co-compose beautiful music together. Maybe even thunderous music.
Beet X
Disclaimer: The information in this article is for educational purposes only and is NOT intended as financial advice. Beethoven X is not liable for any investment/trading activity of users.
