Bretton Woods 2.0: ROME <> OHM

Bretton Woods 2.0: ROME <> OHM

Setting the standard for Bretton Woods 2.0, a model for cross-chain currency collaboration.

Background on Bretton Woods

In 1944, on the heels of the conclusion of World War II, delegates from 44 countries met in Bretton Woods, New Hampshire to determine the future of international trade and commerce. Following World War I, these countries had, for decades, been setting up barriers between their economies, imposing restrictive trade policies and competitively devaluing their currencies to gain an advantage against one another.

The lessons of the resulting Great Depression and the experience of World War II led these delegates to forge a new path forward. This new path focused on a cooperative effort between nations in order to promote economic growth for all, whilst avoiding a 'beggar-thy-neighbor" policy. Bretton Woods was eventually ratified, putting both the dollar and a gold backing as imperative to each country's monetary policy.

Opportunity in Today's Crypto-Economy

In many ways, we find ourselves at a similar point in the young history of decentralized economies. Today, we have burgeoning ecosystems on a number of different chains, fragmented but with each encompassing their own unique offering, be it on Ethereum, Avalanche, Polygon, Solana, Cosmos or Dotsama.

Across these ecosystems, dollar-pegged stablecoins have been the most utilized assets, acting as the primary trading pair, option for folding leverage, safe haven, and otherwise key to how every ecosystem functions.

But every dollar-pegged stablecoin faces a similar issue: their value depreciates due to soft currency economics and the perpetuation of easy monetary policy. 

At Rome, we believe in a future where truly decentralized currencies form the basis of the crypto economy in each ecosystem. And while there are many contenders, ROME was designed to build on top of OHM, the premier cross-chain reserve currency representing DeFi 2.0.

The question we must ask ourselves is whether this is again a zero-sum game, with each reserve currency on each ecosystem competing with OHM itself for primacy, whether by currency over-inflation, by carving out restrictive or exclusive spaces, or by racing to beat each other to every chain. 

We don't think so–we believe that, just as in 1944, this is a moment to forge a path forward through cooperation that promotes economic growth for all.

Our focus as a DAO is on serving the Dotsama ecosystem and growing unique revenue generators that cater to this ecosystem. We aim for Rome to become the dominant trading route on Moonriver & Moonbeam. We aim for RomeDAO to own the stable-to-stable liquidity rails. We seek to incubate and support the next generation of DeFi projects on Moonriver. And we're building APYRPG, a gamefi experience that leverages ROME as its base currency and the RMRK NFT legos that will be native to Kusama and Moonriver. Lastly, we intend to support the Moonbeam ecosystem and the wider Dotsama ecosystem as we grow.

But, just as in 1944, it was not the United Kingdom's aim for the pound sterling to become the reserve currency of Japan, it's not RomeDAO's goal to become the reserve currency of Ethereum, Avalanche or Polygon. We believe Olympus is best situated to achieve said result. Rather than competing with Olympus on this front, both OlympusDAO and RomeDAO can mutually benefit from each other's success. In doing so, we can set a model for other projects across chains to collaborate in a positive-sum manner for the benefit of all.

Path Forward for RomeDAO <> OlympusDAO

The first step in accomplishing this collaboration will be to accumulate gOHM in our treasury through bonding, which we will initiate soon. As we stated in our pre-launch Medium articles, our initial goal will be for roughly 33% of our treasury's risk-free value to be held in gOHM.

Our intent is that, as Olympus proceeds along its path to establishing itself as the preferred medium of exchange and unit of account of decentralized finance, we will shift more and more to being backed by gOHM and eventually OHM-backed stablecoins such as oUSD.

The DAO has 3 basic steps to accumulate gOHM as its primary backing:

  • Shift a high percentage of bond capacity to gOHM bonds for a 3-week period (without adjusting aggregate debt targets).
  • After ~33% of RFV is reflected in gOHM, the capacity for gOHM bonds will be adjusted to maintain a similar % of treasury as the treasury grows. The DAO will vote on any further substantial increases to gOHM's relative standing within Rome's treasury.
  • Once ready, the DAO will seed a wsROME-gOHM pool with Proteus rewards enabled, allowing the pool to farm additional gOHM + SOLAR + MOVR rewards out of the same pool. The original Proteus proposal included Moonriver as a primary liquidity target because of Rome; we will reaffirm these rewards through a freshly posted OlympusDAO forum post.

How does this benefit OlympusDAO?

  • Increased demand for OHM.
  • Liquidity for OHM on new chains.
  • Reduces need to focus scarce resources on Moonriver/Moonbeam or more broadly Dotsama. Rather than competing with Olympus over the bottom of the monetary stack in this ecosystem, Rome will be building on top of Olympus, and increasingly so over time.

How does this benefit RomeDAO?

  • Obtain gOHM incentives through Proteus.
  • Obtain trading fees for all gOHM trading on-chain (note that in addition to natural demand, cross-chain arbitrageurs will drive fees).
  • Promote establishment of a decentralized cross-chain reserve currency.
  • Holding a high quality yield bearing asset as a high % of RFV. 

How does this benefit both Rome and Olympus?

By being entangled in such a manner, both DAOs encourage each other's growth vis-à-vis the Bretton Woods model. By default, the growth of Rome means the growth of Olympus by merit of our continually growing gOHM backing. And likewise, the growth of Olympus means the growth of Rome by merit of the value of our gOHM inflating.

Rome (III, III) 🤝 (3,3) Olympus.

Why so much conviction in OHM as a reserve currency?

OHM presents as a "reserve currency." While it is still early (un-ironically), there are two key milestones it is on its way to achieving to gain true reserve currency status:

a.) Relative stability: Become attractive to asset allocators of all kinds (individuals, institutions, DAOs, etc.) regardless of market cycle. In times of risk-on markets, it presents as a robust currency that will maintain value and provide attractive yield; in times of risk-off it presents as a robust currency that is a relatively safe flight-from-risk.

Ideally, it functions as an asset that is neither risk-on nor risk-off but rather an all-weather crypto asset. OHM's treasury growth flywheel, deep liquidity, and tapered inflation will enable this milestone in the not-too-distant future.

b.) Treasury presence: Be held in some capacity by the majority of treasuries across crypto. The majority of treasuries are currently overexposed to their own tokens or hold a high volume of pegged stablecoins.

A few primary factors will eventually give OHM its permanence in the ecosystem:

  • Size: in just 8 months, the OlympusDAO bond model has helped the treasury accumulate nearly $200M in RFV and a push in the direction of $1B total treasury value. Olympus also has a diversified and robust stream of non-bond revenues from investment activities, market making (LP positions), bonds-as-a-service to other protocols (Olympus Pro), in addition to various sources of revenue from quality projects choosing to partner and incubate with the protocol.
  • Lindy: age is perhaps the Achilles heel of OHM to date. True trust in the protocol has not yet been achieved, but every day that passes, OHM survives and grows stronger/more trustworthy. This presents an opportunity for early adopters to participate in the growth of the network as it matures.
  • Diversity: holder diversity is important as the asset quickly transitions from lofty APYs as a primary attraction to robust revenue streams and relative stability. A diverse audience of holders such as individuals and funds looking for a risk-off substitute, un-pegged maxis who seek to escape from servitude to the dollar, and perhaps most importantly, treasuries that use OHM to diversify.

As we move into a multi-chain reality, it's vitally important that OHM establishes itself across the hubs of crypto activity. This expansion is essential for both the size and diversity factors above. As capital expands to other ecosystems, holder diversity across each ecosystem differs. 

For example, Avalanche presents as a low-cost chain for a risk-on appetite but also cares about decentralization. Solana presents as a VC-heavy chain with massive throughput. Kusama presents as an experimental community-chain for pushing the limits of the Dotsama design while Polkadot presents as a more white-label option. 

gOHM in treasuries, liquidity rails, and eventually native status in each of these ecosystems is crucial in that it expands holder diversity and robustness under a large array of market conditions.

Others talk. Rome and Olympus BUILD.

For Rome and Olympus. (🏛,🏛)️

Twitter: https://twitter.com/romedaofinance

Discord: http://discord.gg/romedao

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