Inverse Bonds

What are inverse bonds?
They buy your OHM and sell you a backing asset from the treasury.
They buy your OHM at a premium (slightly above market price) and then burn it.
They have no vesting and the asset exchange is instant.
They are only available while the OHM market price is below the backing per OHM.
They are launched by the policy team.
Their price is determined by the market.
Why are these bonds being introduced?
The policy team enacts monetary policy to support the health of the protocol.
Inverse bonds are an additional tool for the policy team to do that effectively.
They allow OHM to be sold without directly affecting its market price.
Their purpose is
to absorb some sell pressure for OHM.
to increase the backing per OHM.
They mirror the properties of regular bonds that have been incredibly effective.
What assets can I bond?
You can bond only OHM v2.
You must unstake your sOHM or gOHM first.
How much will these bonds cost?
Their pricing mechanic is basically the same as for regular bonds:
The price and payout value of an inverse bond start at the market price of OHM.
The payout amount (premium) slowly increases until someone buys a bond.
The payout amount (premium) is then reduced and will slowly increase again.
They will effectively buy OHM at a premium – slightly above market price.
You will get more value for your OHM compared to selling directly to the market.
What asset will I get for these bonds?
Different bonds will be provided that pay out different assets.
The policy team will add and remove bonds based on market conditions.
How many of these bonds will be available?
Bonds have a limited capacity and are sold out once their capacity is reached.
Bond capacity will be determined by the policy team based on market conditions.
When will these bonds become available?
First they need to pass the vote in the Olympus forum.
Next they need to pass the Snapshot governance vote.
After the vote a modified version of v2 bonds will be deployed for inverse bonds.
Finally, the policy team will decide if and when inverse bonds will be made available.
Where can I buy these bonds?
You will be able to buy them on the Olympus website but only on the Ethereum network.
They will be offered only while OHM trades below the backing per OHM.
How do these bonds affect the backing per OHM?
The protocol acquires and burns OHM for a fraction of the backing per OHM.
The remaining fraction of the backing increases the backing of all other OHM tokens.
How do these bonds effect the runway?
Bonds that pay out risk-free assets will shorten the runway.
Bonds that pay out other assets will extend the runway.
Do these bonds guarantee a price floor?
No. They simply increase the backing per OHM and absorb some sell pressure.
That has a positive effect on the market price of OHM.
Can these bonds drain the treasury?
The policy team decides how much OHM can be bonded in total.
The policy team allocates the amount of payout assets upfront to safeguard the treasury.
Inverse bonds do not have direct access to treasury assets.
Will the DAO itself bond OHM?
No, OHM in DAO funds will not be used for inverse bonds.
Why are they called "inverse" bonds?
Regular bonds take in treasury assets in exchange for OHM.
Inverse bonds take in OHM in exchange for treasury assets, so the inverse.
Are these bonds the same as a buyback?
While they seem similar there are notable differences:
They absorb sell pressure because they buy OHM slightly above the market price.
They reduce sell pressure further because they increase the backing per OHM.
Their availability is limited to certain market conditions.
The amount of OHM tokens that the protocol will acquire and burn is limited.
Sales are driven by market demand and not by the protocol or the DAO.
What is the backing per OHM?
The USD value of the assets in the treasury is called “backing” or “reserves”.
OHM in liquidity does not count towards the backing.
Locked assets like vlCVX and veFXS do not count towards the backing (for this purpose).
That backing divided by the amount of OHM in circulation is the “backing per OHM”.
The current backing can be found in the Olympus Lookout dashboard under “Backing”.
Note that the backing on the dashboard is higher as it does include locked assets.
Example
ETH inverse bond
$120 backing per OHM
$100 market price of OHM
$100 bond price
$105 payout per bond (5% premium over the market price of OHM)
→ Treasury takes in $100 in OHM in exchange for $105 in ETH.
→ That OHM is burnt.
→ $15 of backing can be allocated to the remaining OHM tokens, increasing overall backing.