Edit: updated circulatingSupply to totalSupply, as the DAO OHM has migrated and the two are no longer equal on OHMv2.
The treasury has begun to migrate its OHM LP positions from OHMv1 to OHMv2, starting with the OHM-WETH pool.
To ensure stability across the remaining OHMv1 pools, there is a need to keep significant liquidity on the books for OHMv1 pairs. This is to prevent liquidation risk across lending/borrowing platforms for Ohmies who have taken out loans against their sOHM, in case liquidity dries up.Key obstacles: Until 1) price feeds are updated to the OHMv2 pools, and 2) lending partners have updated their logic to take these new feeds into account, we must keep OHMv1 liquid. Therefore, this first part of the migration has only moved a portion of the entire treasury LP holdings over to OHMv2.
Referencing the Olympus documentation, the rebase is defined as:
Note that rewardRate is in blue to highlight that it is a constant in this equation, and is defined by the Reward Rate Framework laid out in OIP-18.
APY can be extrapolated from rebaseYield with the following relation:
https://lh3.googleusercontent.com/opi-aLR9EHGyVA6zLwBbQYv1LKB2XYVvWKXdQmoUwB08kkN4wNn5Iu9UezTRE90U5oKGgK3awD6Tf8FPI90_A1UkDElz3Zu-G2LKLktsaspRAx5r9pMSSnMdI1st70rTpulEuQtS
What this means is that when totalSupply is low and stakedSupply is high, the APY is reduced.
Bottom line:
Because some OHM has to remain in OHMv1 as part of the LP pools, totalSupply on OHMv2 will be lower than normal. This is why we’re temporarily seeing lower APY than before migration started. There will be some temporary minting and burning of OHMv2 for the v2 Staking contracts to see the correct amount of OHMv2 totalSupply.