[OGP-DRAFT] Unification of OATH and GRAIN

[yuvi]

Proposal Title:

Unification of OATH and GRAIN

Proposal Chain:

Ethereum

Type:

Ecosystem Sentiment Vote

Proposal Author:

Yuvi

Date:

22 Mar 24

Executive Summary:

Following informal discussion with community members, the purpose of this proposal is to gauge ecosystem sentiment regarding the unification of OATH and GRAIN under one foundation and one token.

Discussion has been considered and a potential solution for each problem has been included, however readers are reminded that nothing is locked in and I would like to seek feedback to incorporate and strengthen the plan.

Proposal Motivation:

The OATH Foundation’s Collateralized Debt Position (CDP) protocols are intended to rehypothecate collateral utilising the safest possible strategies to neighbouring lending markets, while Granary’s Silos could launch native lending markets, customised to each chain’s specific needs.

Aurelius has made it clear that Granary and their Silos can and will always be the ‘market next door’. Aurelius’ integrated approach simplifies the rehypothecation pipeline and significantly mitigates long tail market risks associated with rehypothecation (external teams, etc).

While the infrastructure still allows for rehypothecation external to the contained deployment, upcoming developments will continue to make the Silo base lending platform extremely competitive.

As we worked together to develop Aurelius, the pursuit of closer ties illuminated a critical flaw in the current economic structure.

Chapters are intended to benefit OATH holders, while Silos are intended to benefit GRAIN holders. As we are seeing with Aurelius, continued collaboration of the two will blur the ability to reward respective holders in a way that makes sense to both communities.

Proposal Specifics:

This proposal aims to describe a pathway to unify OATH and GRAIN, such that the teams can concentrate effort on bringing value to one token instead of two.

The unified token:

Herein referred to as “newtoken”, pending market research and design.

Unified - Newtoken will serve as an index token for all innovation and product releases from the unified foundation, combining the value proposition of bOATH and GRAIN (wholeGRAIN, in time) into a single solution.

Single-staking - We believe that since the launch of OATH and GRAIN, we now have a strong enough case to offer single-staking. We have always been averse to it because of regulatory uncertainty but with recent legal guidelines/ precedents being set we believe we can overcome this obstacle.

Strategic value - OATH Chapters can generate X value to OATH holders and GRAIN can generate Y value to GRAIN holders but we believe that combined, the two can generate more than X+Y value. That is the premise of the unification. Streamlining governance will also free up resources for development and growth opportunities.

The chain:

Ethereum - Ethereum offers access to orders of magnitude more trader and investor interest and volume. All of the funds and investors we speak to say they prefer mainnet. Some large players have mentioned they are interested in investing but want access via Ethereum mainnet. I am interested to hear counter arguments for launching on Ethereum Mainnet other than gas.

Gas Considerations - Mainnet gas is considered expensive and we don’t want to rule people out. We would aim to develop the most gas efficient pathway to full involvement, being to simply stake the token for full access to product release and governance.

Governance:

Since OATH Governance is matured beyond GRAIN, the unified system will carry forward the OATH governance model.

Migration (here we go…):

Max supply 100,000,000.

Tokenomics commensurate with OATH and GRAIN tokenomics, but in favour of OATH and GRAIN holders migrating.

Currently 37% of OATH and 28% of GRAIN are in circulation, a ratio of 57:43. I propose that 40% of newtoken be allocated to the migration, such that migration results in a net increase of circulating supply with users. Migrating tokens should be accounted for in a manner commensurate with the ratio of circulating supplies. Similar to an LGE where users buy shares of the allocation and cost is determined by the ratios of circulating supply.

Example maths*:

37% * 400mil = 148,000,000 OATH circulating

28% * 800mil = 224,000,000 GRAIN circulating

40% * 100mil = 40,000,000 newtoken circulating

57% * 40mil = 22,800,000 newtoken max OATH allotment

43% * 40mil = 17,200,000 newtoken max GRAIN allotment

148mil/22.8mil = 6.49 OATH per share

224mil/17.2mil = 13 GRAIN per share

*Actual numbers are subject to change and will be confirmed at the commencement of migration.

These calculations are based on circulating supply only. I personally do not want to base the allocation on market capitalization because it is biassed and something we have no control over. Mcaps grow and shrink, people think things are under- and over-valued, and it is entirely speculative while circulating supplies are quantifiably concrete. I know people will complain about the discrepancy between monetary value and my personal position is that you can either offer a justified alternative solution, or arbitrage the migration yourself. I don’t know how else to solve it.

Based on the tokenomics of OATH and GRAIN I suggest the following:

10% allocated to liquidity (targeting centralised exchanges to increase exposure)

20% allocated to LBP^

30% allocated to strategic reserves and partnerships (including allocation to vest migration), including centralised exchange listings and HFT prop firms. We have developed relationships with larger players but our lack of being on ETH + our small size causes them to pause active investment.

^OATH and GRAIN both had around 20% allocated to respective teams but I propose committing that allocation to an LBP to get it out of team hands and into circulation. The reason for this is that it reduces long term liabilities associated with streaming to team members, especially if they choose to leave the team or if the team grows. Funds raised in the LBP should be paired with newtoken for liquidity or spent on developing and securing our product offerings. Team members can obviously still migrate their personal holdings and/or participate in the LBP.

Learning from OATH’s relationship to bOATH, there is zero allocation to regular emissions/ inflation. Products will incentivize themselves, and newtoken will focus on value aggregation and ecosystem governance.

OATH and GRAIN vests:

At the end of migration, a snapshot of unclaimed OATH and GRAIN should enable us to effectively migrate vests by offering a claimable 12 month vesting NFT (token claims enabled during 12 month vest). The NFT will be tradeable allowing users to exit their positions or purchase other positions to increase their exposure.

I haven’t actually checked the dev requirement but if it’s possible then I think it is a good idea (I will confirm dev requirement).

“Always announce your ideas first and check with devs later.”
– A non-developer, probably

This will also have to be factored into the newtoken tokenomics and will come from the strategic reserve allocation, following the same maths as the liquid migration logic. I am yet to gather relevant vest supply data but the maths works the same way.

22 Mar 24 EDIT: 12 month vest, and NFT positions, are not confirmed.
OATH vesting is scheduled to complete on 30 Jan 26 so newtoken vesting can align with that and migrated GRAIN portions can have vesting time scaled down to match so that all vesting is complete at the same time, or GRAIN vesting migration can be layered on top. We can have a separate vote to explore options there.
NFT positions help people exit early or increase their exposure at a discount if they want to buy more vest NFTs. It also helps wallet rotators move their vests for security purposes. We can also nix the NFT idea and just migrate the vest with the same infrastructure. Happy to set up a separate vote for that also if there’s enough interest.

Ethos and Granary:

In the absence of OATH and GRAIN, Ethos and Granary will temporarily not be incentivized, less treasury assets being used for critical functions (Ethos stability pool or Granary high utilisation risk mitigation, for example).

EthosV3 will adopt the Aurelius model (e.g. integrated lending market, plus EthosV3 extras) and launch its own token and function autonomously, just like Aurelius.

Granary deployments will be maintained but if a CDP/MM launches on a chain with a Granary deployment, then that deployment will be absorbed or replaced by the new protocol, ensuring user funds are always secure and accessible.

Potential Alternative Course of Action:

If the community has strong enough conviction and justification, it is possible to not deprecate GRAIN and OATH, and allow them to coexist with newtoken, servicing respective Granary and Ethos deployments.

This would narrow the scope of GRAIN and OATH to simply support their particular deployments and not the broader ecosystem as they do now.

Team Experience:

The OATH team and GRAIN team have been working alongside each other since they were respectively founded. Granary was founded independently before coming into the Byte Masons umbrella and until now worked independently of the OATH foundation to achieve its own roadmap / growth strategy.

Key Objectives & Success Metrics:

The pathway to unification should be logical, obtainable, and address technical debt liabilities as they pertain to both teams.

Length of Engagement & Budget Breakdown:

The duration of engagement is indefinite and there is no change to budgets. Unification of tokens is primarily administrative and will help achieve long term growth goals in a more focused way. Of note is the impact on Digit, Ethos, and Granary protocols. While Granary and Ethos have evolutionary pathways, Digit can be absorbed into respective deployments (à la Harbor Market) that will support their own relics.

Community Support:

The community has expressed interest and support in conversations in telegram. Some concerns and considerations have been raised and noted and are hopefully addressed in this proposal. Continual feedback is strongly encouraged, and possible solutions are much more helpful than outright rejections.

The Granary team has expressed their support and are welcome to provide additional context and feedback.

Partnerships:

Unification would leverage the inherent partnership with the Granary team.

Risk Assessment:

Conflicts of interest may hinder team relationships however this has not presented as an issue thus far and is not reasonably foreseeable.

Additional Details:

Please provide constructive feedback. I have tried to assess each problem logically and analytically however if you strongly disagree with something, please provide justification of an alternative instead of unfounded rejection.

If supported I will continue to parse data and provide details including historical revenue and projections, migration details, resourcing, etc.

[bebis]

Thank you for all the effort here, Yuvi. Overall I think the plan is sensible and gives us a path toward creating a more simple and sensible value proposition.

• NewToken represents our Modular DeFi movement, with a similar value prop as Celestia or Dymension. Single-stake and get everything.

• ChapterToken represents a fixed-scope platform/super-app leveraging NewToken tech, suited to an individual network. Single-stake and get chapter value.

The larger audience / capital base on Ethereum also makes sense as a home base for the core/hub of the ecosystem. Since the whole point is simply staking in Reliquary and voting in governance, the high gas costs aren’t a big concern. Kind of a one-time headache.

As we’ve discussed in Telegram and internal chats, this would also give us a powerful opportunity to regain the CEX listings we lost with the Multichain disaster and leverage our market maker / VC / KOL relationships much more effectively.

I also think our maturity as a team would allow us to remedy a lot of the mistakes we made with the OATH and GRAIN launches, with the former being too liquid and shedding value to IL and toxic arbitrage and the latter being not liquid enough and suffering from its overvaluation post-LGE. I suppose this could be our chance to find the Middle Way.

Mostly interested in others’ feedback.

[JesseDS]

Is there no way to just migrate grain to oath?

[yuvi]

Following observation made in telegram:

There is potential for massive discrepancies in allocations to OATH and GRAIN holders due to price differences and migration volumes of respective tokens.
A potential solution is to hold an additional 5% allocation (something like 2% from LBP and 3% from strategic reserves; TBC) to be allocated at the conclusion of the migration, to remedy a potential skew.

[yuvi]

I’m open to a justification for migrating GRAIN to OATH but imo the value proposition of having a new token, official unified direction, and clean slate, is probably higher than just moving eggs to the other basket.

[JesseDS]

The justification would be that Oath has held a pretty consistent price. With this proposal we would be moving to a new token with an indeterminate market value. I would expect extreme near term volatility as you introduce all the grain holders into the system. However, simply migrating grain to oath would not incentive grain holders to sell because they would get oath at the value of grain.
After that migration, we could then vote on a second migration to a newtoken.

[yuvi]

@JesseDS

The justification would be that Oath has held a pretty consistent price. With this proposal we would be moving to a new token with an indeterminate market value. I would expect extreme near term volatility as you introduce all the grain holders into the system. Simply migrating grain to oath would not incentive grain holders to sell because they would get oath at the value of grain.
After that migration, we could then vote on a second migration to a newtoken.

I kind of see where you are coming from but this does not fix your concern.
Migrating GRAIN to OATH will still result in market value arbitrage and speculation.
As soon as you set a migration ratio for GRAIN to OATH, you determine the arbitrage profitability, and prices will correct, for better or for worse.
A second migration will probably exacerbate it more than anything.

I think this additional allocation can do more to correct the issue:

[OGP-DRAFT] Unification of OATH and GRAIN

Following observation made in telegram: There is potential for massive discrepancies in allocations to OATH and GRAIN holders due to price differences and migration volumes of respective tokens. A potential solution is to hold an additional 5% allocation (something like 2% from LBP and 3% from strategic reserves; TBC) to be allocated at the conclusion of the migration, to remedy a potential skew.

[JesseDS]

Yeah, you’re right. I can’t think of a better way to do it. I keep writing other ideas and then deleting them as they aren’t any better than what you’ve come up with .

[yuvi]

I appreciate the input and tbf I went through the same process of having 15 ideas for every problem and narrowing them down. I may have missed some things though so challenges are good.

[JesseDS]

In regards to the vests, could we migrate the vests at the same percentages instead of creating tradable NFTs?

[crypt0c]

Huge props to Yuvi for undertaking this, could not have been an easy one.

I immediately had initial concerns about the distribution ratios between oath and grain in relation to current prices, however, the idea of holding a reserve amount to be distributed at the conclusion of the migration to help correct any skew as best possible, is an acceptable solution to this. It’s really a problem with no perfect solution, so at the end of the day we will all know the ratios and the plan. If one wants to try to maximize their allocation of the new token they’re free to do their best.

No major concerns besides that. I think there’s a ton of things to be bullish about in this proposal and fully support going in this direction.

Also curious why we can’t just treat the vests the same way instead of doing the nft thing.

[yuvi]

Thanks guys, discussing Jesse’s comment in Discord atm to reduce forum clutter and will post findings here regarding vesting terms and positions.

[flawless_noob]

I don’t like it.
The reason behind it may be that I don’t understand how it impacts the vision and products into which I invested, which is OATH not GRAIN.

To put it simply:
I bought into OATH ecosystem understanding it’s products and vision of chapters. Please share why I should even bother at this stage to consider shenanigans with some other project and playing with tokenomics in which usually smaller investors get wrecked (what usually happens on such expensive chain like eth)?
Especially now, when we’re at an early stage of starting to deliver what was promised. If there are some operational missing parts or other obstacles why can’t they be developed by the team? or leased from other parties than GRAIN without playing with key value carrier which is the token?

This forum should be focused mainly on the interests of OATH. I’m feeling that this proposal is a way to solve some other problems that should not involve oath focused holders.

I wish to understand why OATH needs any other 3rd parties involved? Is this the only way to solve current challenges? What are these challenges? I’m interested in the success of OATH not Grain.

[flawless_noob]

Question to the team and people involved in grain - what is current revenue generated by grain that it’s bringing to the table?

[CatDad]

Hi all

The overall concept sounds promising. It could boost revenue streams and bring together communities, and will simply operations and resource allocation moving forward. Also the idea of newtoken not having any emissions is very interesting.

A few concerns/thoughts:

Timeline: My main worry is the Timeline. While I’m not concerned about short-term price movements given our focus on Chapter product deployment and ongoing team efforts, a lengthy token merger process could leave us in limbo for the rest of the year. This delay could potentially cause OATH holders to miss out on gains once again. If this is going ahead, it would be ideal if this could be finalized within 30 days.

Priority of Token Merger: For something as significant as Token Merger, personally I would put that as a higher priority than any single Chapter deployment or Silo partnership.

Dilution of OATH Holders: Just need to make sure Oath holders aren’t diluted even more lol. Like Oath holders were supposed to get 100% of the Aurelius allocation, but now that will be shared with Grain holders, and new LBP entrants.

Revenue Comparison: I would be keen to see the current and expected future revenue of OATH and GRAIN separately.

[NauLxD]

Thank you @yuvi for the proposal. You are getting good on translating stuff for non-genius people.

I am on favor of the merge. I understand that there was a reason to launch two different tokens as the market and regulations conditions were different at the time. That said, I have a few concerns

1- We had 2 LGEs (1 for each token), now we will have a 3rd one (newtoken) and that will be the same as 3 LGEs for same token (since the migration will merge the first two LGEs)… It is almost a meme about BM’s LGEs etc. I still trust the team and never sold, but for a fact we need to be VERY cautious with new LGE, so we don’t rekt old or new investors. What would make us confident that the 3rd time would work well?

2- Some points are talked about but no numbers are shown. Treasury, revenues, and how that compare between protocols. It may not be very strategic to show those numbers, but it is hard to ask feedback from community / investors if we don’t have real numbers to work with.

3- It was sold to investors (token holders) that OATH would get most (if not all) revenue from Ethos and Grain would get all revenue from Granary. If we merge and now we get “only” the % of supply for new token + 10 or 15% or revenue from Ethos (instead of 100% as sold to investors initially and nothing from Granary (since it will be absorbed), what would compensate for that? I would expect something like a “boost” during migration for having a selling point taken out.

4- Will the migration be as bOath or Oath? in case this proposal moves forward, is there any recommendation on if we should open or not the bOath position and then do whatever we want with the eth part?

[coop]

Overall, I’m onboard with this idea. I had some heartburn when I saw Ethereum as the chain because of gas costs, but the reasons for it are sound. While there are concerns about losing some token value going through the migration process and dilution, I’m hopeful that the future opportunities for value will outpace the alternative. And inaction where we currently are would lead to a worse outcome, imo. A new token and a new chart would be a fresh start and an easier sell.

My biggest concern is time. If this goes forward, I think this needs to be buttoned up within the next few weeks so things can settle and we can move forward with all of the chapters, silos, CEX listings, marketing, etc, while there’s still time in the bull market for the improvements to pay off.

[Deantoshi]

OATH + GRAIN revenue Dune board can be accessed here: https://dune.com/bytemasons/bytemason-tvl-fees

This is a work in progress and will have more metrics added over time.

[crypt0c]

Slept on this proposal last night. Even more bullish than yesterday. Couple more thoughts to put out there…

I’ll echo several others in here saying that if we’re going through with this, which at this point it seems almost silly not to, then it definitely needs to be number one priority and completed asap. Let’s not drag this out. Let’s get new token released and staking before any chapter or silo token distributions. And maybe pause the marketing initiative lol and resume that once we have a new token and foundation to market. Within a month as cat dad mentioned would be excellent if achievable.

Also several comments on losing revenue from both ethos and granary with new token are understandable. Has there been thought on what happens down the road when the majority of chapters/silos have been released and that slows down or even stops? Might not be for a while but there can’t be new protocols released to infinity. What’s the value prop of new token at that point? Will new token still get a portion of revenue from all chapters and silos to keep demand and interest in new token? Or are there other plans for value beyond just distributing chapter and silo tokens?

[NauLxD]

Thank you for the Dashboard Dean.

I would like to reinforce the point 3 of the above post I made. I would like to see more clearly how loosing part of the initial reason to invest on Grain / oath (100% revenue from granary / ethos ) will be compensated by the migrations etc.

adding a point:

5- With the dashboard is another question regarding the already accumulated revenue on treasury (that we dont have access to). Those were originally proposed to token investors, wholeGrain never got ready on time (which isn’t investors fault), then now we will migrate without those funds being distributed to investors? If part was used to buy back tokens, fine, but where the tokens went? Distributed again? all of them? Wasn’t the original proposition and reason why we bought grain to have those directed to us and not just buy backs? As an early investors on both tokens I would like to understand how the migration will cover for the points mentioned on my coments “3” and “5”.