Summary
This proposal outlines the plan to decommission the gOHM market from FiRM, Inverse Finance’s fixed-rate lending protocol. The decision is based on the market’s performance, user demand, and strategic alignment with FiRM’s objectives. This action is part of a broader housekeeping initiative being undertaken by the Risk Working Group to ensure that any inactive partnerships or contracts are functionally shut down.
Background
The gOHM market was launched on FiRM in February 2023 as part of an initiative to diversify the collateral options available to users. At its peak, FiRM’s gOHM market had 8.44MM in TVL, second in lending markets only to Fraxlend. However, since the introduction of Olympus DAO’s cooler loans in August 2023, the market has lost favor amongst gOHM holders.
Cooler Loans is a decentralized lending facility that allows OHM token holders to borrow DAI by using their gOHM tokens as collateral, offering a highly competitive product that other lending markets such as FiRM have struggled to match. As of this write up, FiRM’s gOHM market has devolved to having 5 users, $14.37k in TVL, and only $6.07k in borrows.
Motivation
Cooler Loans differentiates itself from existing lending markets in several key ways. Loans originate from Olympus Treasury through a clearinghouse contract. Practically, Cooler Loans acts as lender-of-last-resort and can guarantee liquidity because every gOHM is backed by DAI (The loan-to-collateral ratio is 2892.92 DAI per gOHM). All loans have a fixed maturity (121 days) and all loans have a fixed interest rate (0.5% APY) that is independent of market conditions. A user can extend a loan at any time, for as long as they want, with the same terms they opened a Cooler with. Furthermore, Cooler Loans offers liquidation-free loans because every gOHM is backed by DAI. As long as Loan-to-Collateral value is at a safe discount relative to actual backing, the protocol remains solvent.
Cooler Loans, by all metrics, has been a resounding success, with over $100M borrowed and $66M in remaining capacity. So long as Cooler Loans remains operational, it’s safe to assume that borrowers won’t be returning to FiRM. As such, the RWG recommends FiRM’s gOHM market be decommissioned.
Decommissioning Plan
As part of the decommissioning of the current gOHM market, the supply ceiling will be set to 0 DOLA and borrowing will be disabled. This will not impact any user with debt in the gOHM market currently. It will just mean that no more additional borrowing will be possible on this market.
Conclusion
The proposal to decommission the gOHM market from FiRM is a strategic decision aimed at enhancing the platform’s overall security and aligning with user demand and market trends. The process will be managed carefully to minimize impact on existing users and to maintain the integrity and trust in FiRM’s ecosystem.