December was an eventful month, with the Omm community voting to approve 4 governance proposals – the most in Omm's short history:
- OIP 4: OMM reward allocation change for stablecoins
- OIP 5: Protocol fee for protocol-owned liquidity
- OIP 6: Add OMM and BALN to Omm
- OIP 7: Reactivate the ICON borrow market
Most of the early contributors' work was centered around the changes required for these improvement proposals, but they also:
- Added a vote notification design to alert users to new proposals
- Wrote queries to track usage analytics (utilisation rates, number of suppliers/borrowers, interest rates, total supplied/borrowed, etc.)
- Fixed a bug that prevented users from repaying their full balance
- Optimised the interest rate charts
- Researched more into the Curve and boosted BALN models
- Updated the P-Rep list to reflect ICON's new bonded delegation model
OIP 4 was approved in early December, and aimed to test how varying OMM reward ratios incentivise borrower behaviour. Borrowers are the primary fee generator for Omm – they pay a 0.1% fee every time they borrow, and incentivise people to supply by raising the interest rates – so it's important to strike the right balance.
As a result of this proposal, the OMM reward ratio was adjusted for 3 stablecoin markets (which previously all used a 50/50 split):
- IUSDC: 50% to suppliers | 50% to borrowers
- USDS: 25% to suppliers | 75% to borrowers
- bnUSD: 0% to suppliers | 100% to borrowers
And these are the changes to each market since the proposal was enacted:
|Suppliers||Supply amount||Borrowers||Borrow amount|
|IUSDC||- 16%||- 45%||- 8%||- 45%|
|USDS||- 19%||- 27%||- 8%||- 48%|
|bnUSD||+ 6%||- 36%||+ 14%||- 38%|
Of interest is that while the bnUSD market has attracted new suppliers/borrowers, people have withdrawn from the other markets by a similar margin.
And while all markets experienced a significant reduction in volume, the supply amounts stand out: the USDS supply (with an OMM reward ratio of 25%) fell by 27%, while IUSDC (with an OMM reward ratio of 50%) dropped by 45%. IUSDC pays suppliers twice as much OMM as USDS, yet the IUSDC supply declined by almost double.
Like all data points, these numbers shouldn't be considered in isolation: many other factors will have played a role in these changes, including the price of OMM, the price of ICX, the availability of bnUSD, and the reactivation of the ICON borrow market. But based on these results it appears the A/B test is working, and the community will soon have enough data to inform future market incentivisation strategies.
OIP 5 was proposed for the Omm protocol to own a large stake of the OMM liquidity pools. To do so, ~$406K of protocol fees in IUSDC, USDS, and sICX were paired with an equivalent amount of OMM from the DAO fund, and supplied to the OMM liquidity pools on Balanced.
These pairs were created while OMM was trading at $0.10, so Omm effectively owned around $812K of liquidity – 30% of OMM's total liquidity. This change in liquidity ownership will reduce the overall OMM token emission to the market, allow Omm to earn more of the Omm Tokens from liquidity rewards, and earn a cut of the fees from people trading OMM.
The OMM price has since increased to $0.15, and Omm now owns $976K of liquidity (a 20% increase in $ value). More people have provided liquidity since the proposal was enabled, so Omm currently owns 28% of the liquidity.
OIP 6 proposed to add Omm Token and Balance Token markets to Omm. Both assets can be used as leverage, and OMM suppliers receive 0.4% of the daily OMM distribution. As the primary DeFi governance tokens on ICON, this update received a lot of interest from the community, but so far OMM and BALN have been less popular than the other markets.
It is worth noting that only 16 people have borrowed Balance Tokens, even though BALN provides additional earning opportunities via staking and liquidity pools.
Following the ICY/ICZ snapshot on December 29, OIP 7 reactivated the ICON borrow market after a 2-month hiatus. To encourage more people to borrow from this market, the OMM reward ratio was adjusted significantly to favour borrowers.
ICON market reward ratio (for 3.6% of the daily OMM distribution):
- Previous: 90% to suppliers | 10% to borrowers
- Current: 50% to suppliers | 50% to borrowers
Within 2 weeks, the total sICX borrowed has gone from below 50,000 to over 3,000,000. At Omm's peak the total sICX borrowed was over 10,000,000 – even though borrowers received only 10% of the daily OMM allocation – so it will be an interesting one to track over time.
Targets for January
During January, the Omm contributors plan to:
- Tweak and release the interest rate history charts
- Continue to research and create an ICX delegation API for P-Reps to leverage
- Continue to research potential improvements to the token economics
- Brainstorm UI solutions for token economic enhancements