Fellow Bottonians,
We are excited to announce that Botto will participate in the Olympus Pro program after being approached by OlympusDAO. This introduces our protocol to a wealth of opportunity, while also setting us up for a new industry standard: one where the protocol securitizes its future by owning its liquidity rather than just renting it.
Tackling the misalignment
So far, Botto has bootstrapped its liquidity through its liquidity mining programme, offering LP stakers high interest rate incentives. This has served its purpose of attracting liquidity providers and continues to run today.
The drawbacks of this approach, however, are something Botto is experiencing firsthand. Mercenary capital continues to arrive, farm, and flee from the protocol at alarming rates, with over 40% of liquidity being withdrawn from Uniswap over the past 4 weeks alone. Masterchef analysis indicates an industry-wide problem, where 70% of yield farmers withdraw their liquidity within 72 hours.
There is clear goal misalignment between LP stakers and Botto on several levels. First, the high reward rates have attracted stakers who prioritize short-term gains over the idea of helping Botto gradually become a revered artist, and liquidity gets removed as soon as new yield opportunities present themselves. This effect can be amplified by periods of uncertainty at a macro level, which may lead to a cascade of liquidity withdrawals. Finally, impermanent loss deters long-term supporters of Botto from confidently providing more liquidity than they already do.
Climbing Mt. Olympus
As DeFi matures, so must Botto. We must begin a gradual shift away from antiquated measures where we rent liquidity, and instead allow Botto to build up long-term, treasury-guarded value by implementing mechanisms that allow for protocol owned liquidity (POL). This is where Olympus Pro comes in.
Through Olympus Pro, Bottonians are able to support the protocol and accrue rewards comfortably without the prospect of impermanent loss. Bottonians and others are able to exchange BOTTO-ETH Uniswap LP shares for bonds that emit $BOTTO over time, at a discounted rate.
Olympus Pro helps Botto
By enabling Botto to buy liquidity rather than rent it, joining the Olympus Pro program means a reduction in the reliance on mercenary capital over time. Simultaneously, it also provides the protocol with a productive asset that generates revenue from LP fees.
This shift towards liquidity permanence is a fundamental success factor to Botto. The LP shares a user trades for their bonds are deposited into Botto’s treasury, effectively safeguarding the protocol and its stewards from illiquid markets. Botto’s treasury owns the liquidity, rather than renting it to many LPers who may have ulterior motives.
Botto’s longer time horizon only amplifies the advantages of liquidity permanence. Over time, Botto will accumulate more liquidity in its treasury , which can guarantee stable prices and mitigate the damage of liquidity exiting the market.
And the more liquidity Botto owns, the more revenue the protocol is able to generate outside of auctions through LP fees.
What this means for Bottonians
Olympus Pro provides a shift in market dynamics: mitigating reliance on transient farmers while simultaneously rewarding Bottonians with a new way to accrue extra $BOTTO.
Bottonians are now able to buy tokens at a discounted rate via bonds. Effectively, the user supports the protocol by pairing BOTTO-ETH to create an LP share that represents their liquidity. Users bond their liquidity, receiving a bond that emits to them $BOTTO tokens.
As the bond matures, emissions vest linearly over time, giving the user $BOTTO at a rate that’s discounted from market value. Through this mechanism, supporters of the protocol who would like to gain rewards are now able to do so without any concern of impermanent loss.
Here’s a TL;DR:
- Exchange your BOTTO-ETH UNI for $BOTTO Bonds
- The exchanged BOTTO-ETH UNI is then owned by Botto’s treasury (Protocol Owned Liquidity)
- Bonds vest over a period of 7 days
- Bonds release $BOTTO to you as they mature, at a discounted rate
- There is no exposure to impermanent loss for you with bonds
- Bonds provide the Botto protocol a revenue stream, price stability, and protection from liquidity exits
Final Thoughts
We are very grateful to be able to work with Olympus closely and are thrilled to introduce Botto into the Olympus Pro Bonds Marketplace — not only exposing Botto to tens of thousands, but importantly providing Bottonians a new way to support the long term success of Botto as an artist of the ages.
To learn more about bonds, we encourage you to check out Olympus and sift through their docs!
Join us on Botto’s journey:
