Deepening OHM Liquidity With Mint & Sync
One of the primary objectives outlined in the Olympus12 Action Plan is to bootstrap deep OHM liquidity. As discussed in the plan, the ideal reserve currency is highly liquid and can be easily exchanged for other assets, products and services.
To date, Olympus has utilized liquidity bonds as a means of acquiring protocol-owned liquidity. These bonds have been highly successful, enabling Olympus to control 99% of its liquidity.
Another objective discussed in Olympus12 is to position OHM as a unit of account, meaning that other assets are denominated in the currency. In order to achieve this goal, many different liquidity pools will need to be initiated, maintained, and cultivated to ensure OHM is paired against a variety of different assets. However, it is not always feasible or desirable for the protocol to launch liquidity bonds for all of these pairs.
Furthermore, as emissions grow OHM’s supply it is critical that liquidity increases concurrently so that users can easily exchange OHM with minimal slippage.
Mint & Sync, a brand-new protocol functionality from Olympus, puts us much closer to achieving these goals.
Mint & Sync: Function and Benefits
Through OIP-93, the community approved the introduction of Mint & Sync, which:
- Leverages the “sync()” function available on xyk AMMs to mint OHM emissions directly into liquidity pools with each rebase.
- Incentivizes community members and third parties to provide OHM liquidity across a variety of pairs. This is due to the fact that they will no longer need to worry about missing OHM token emissions by providing liquidity; removing the opportunity cost entirely. New OHM issued with each rebase is deposited directly into LP positions.
Benefits of Mint & Sync
Mint & Sync benefits various participants in the OHM economy.
- Protocols: Major protocols such as Frax will be further incentivized to pair their assets against OHM because people will be attracted to the prospect of receiving OHM emissions while providing liquidity.
- Ohmies: OHM will be available across more token pairs (making it more widely accessible), and community members can provide liquidity across a variety of tokens without worrying about missing OHM emissions.
An outstanding question some may have is whether the introduction of Mint & Sync means the protocol is moving away from the concept of protocol-owned liquidity. Mint & Sync will not change the fact that the protocol will own the vast majority of its liquidity. But, Mint & Sync will make it easier for liquidity to grow deeper across many different pairs as OHM becomes widely utilized across Web3.
When Will Mint & Sync Be Introduced?
At the time of writing, Mint & Sync is live with its first implementation: Frax Finance’s FraxSwap AMM. You can read up on the framework for implementation via this Frax Finance governance proposal: FIP-94.
After the Frax implementation, the community will then determine how Mint & Sync will be expanded to other protocols and liquidity pools as appropriate.
Olympus is building OHM, a community-owned, decentralized and censorship-resistant reserve currency that is asset-backed, deeply liquid and used widely across Web3.