OATH Chapters and GRAIN Silos can offer users more opportunities — and token holders more value — through a strategic merger. This would streamline workflows and operational efficiencies, reduce overhead, and empower the merged organization to achieve a higher level of competitive advantage and market share. And all this value will be captured in one token.
This article examines the benefits of a merger in more detail, offers a planned approach to token migration, rationale for user value, and links for community feedback.
It seems like only yesterday that the OATH Foundation announced the move towards the Chapter model, soon followed by the GRAIN Foundation adopting a similar Silo model.
The intended arc for these independent organizations was that the OATH Foundation’s Collateralized Debt Position (CDP) protocols would rehypothecate collateral utilizing the safest possible strategies to neighboring lending markets, while Granary’s Silos could launch native lending markets, customized to each chain’s specific needs.
OATH quickly realized that Granary and their Silos would, and could, always be the market next door. Embracing this, OATH sought Granary’s Silo tech to fully integrate within a CDP (Aurelius and Ironclad).
This simplifies the rehypothecation pipeline and significantly mitigates long tail market risks associated with rehypothecation. 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 the protocol, the synergies flowed naturally, however 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 and Ironclad, continued collaboration of the two will blur the ability to reward respective holders fairly.
Currently, OATH and GRAIN holders only benefit from Chapters and Silos, respectively.
So what happens if Chapters and Silos unify? What is the most rewarding solution for OATH and GRAIN holders? The discussion has been long and fraught with ‘what ifs’, and has boiled down to the following direction.
Unifying: The Modular Reserve Protocol (MRP)
Following the recent Ecosystem Sentiment Vote, the OATH and GRAIN Foundations intend to unify into one entity, delivering the first Modular Reserve Protocol (MRP) offering (exemplified by Aurelius and Ironclad).
1. OATH and Granary are developing integrated technical management pipelines to support the scaling efforts as we deliver more features across more products.
As the unification process continues, Chapter interfaces and features will be integrated into a unified DeFi architecture, currently featured on Ironclad. Modular Chapter interfaces, combined with our modular Silo interfaces, will act as building blocks, allowing us to quickly construct MRPs, and later modify, update, and configure existing MRPs.
That said, each MRP’s deployment and interface will be tailored to the specific risk profile and market fit of their native chain. This drastically speeds up our go-to-market efforts and ensures our standard of quality. More importantly, it allows our specialists to continue to focus on cutting edge developments that can be rolled out quickly and broadly.
While details of the roadmap are still being clarified, in the interest of transparency and open discussion, we offer the following end state, and fully support constructive commentary.
Visualizing the strategic value generated by the Modular Reserve Protocol (MRP).
Token Unification
1. The purpose of the unified token is to proxy as the index token for all innovation and product releases. Holding the unified token gives users exposure to all deployments, past, present, and future, without having to navigate between chains. This combines the bOATH concept with GRAIN, without demanding users move liquidity to Optimism and stake in Ethos. Alternatively, holding specific MRP deployment tokens can give more concentrated exposure to particular networks or products. This is similar to the Magpie ecosystem structure.
2. As our users know, we have been averse to single-sided staking in the past due to regulatory uncertainty. Our priority has always been to protect users and our products. Since the launch of OATH, that regulatory uncertainty has slowly faded and, in consultation with our legal advisors, we feel confident that we can provide a single-staking opportunity without facing existential ramifications downstream.
Strategic Value
1. It is clear that OATH holders gain more holistic value from Chapters than solely Ethos Reserve. Similarly, GRAIN holders will benefit from Silos as they mature, more than additional Granary deployments. Therefore, a unified approach to Chapters and Silos will benefit the collective. This way, the OATH and GRAIN value propositions stay the same – to capture the performance of all ecosystem innovation and deployments – but are combined into one chain-agnostic solution.
2. In combining revenue streams, Aurelius and Ironclad are demonstrating that the integrated product demonstrates better market fit and network traction, which will translate to increased revenue when compared to independent Chapter and Silo deployments.
Aurelius and Ironclad combine the power and value propositions from Chapters and Silos in one protocol.
Ethereum Mainnet
1. The unified token will launch on Ethereum Mainnet. Since adopting the Chapter/Silo models, the organization has matured and has been rampantly working behind the scenes to build connections to which we previously did not have access. In parallel with the success of Aurelius and Ironclad, we have engaged with investors and market makers to understand their requirements to invest in the ecosystem and the near-unanimous verdict is that the token should be on Ethereum first.
This gives access to significantly more capital that otherwise cannot access OATH and GRAIN staking mechanisms on L2s due to security, liquidity, and operating constraints. The token will be accessible cross-chain, but the core token deployment will exist on Ethereum. This will be achieved via POL at the organizational level and at the MRP level, allowing users to access the token on L2s.
2. Regarding the high cost of transactions on Ethereum, it is intended that the new token will require minimal actions to be fully engaged. Simply stake the token to benefit from product releases, as well as continued governance (commensurate to OATH governance and what would be GRAIN governance). We will constantly strive to reduce gas burdens on Mainnet. Since single-sided staking is within purview, provision of liquidity and management of positions will not strictly be required, reducing cost to users.
Migration
1. Users will deposit their OATH and GRAIN into a burn vault to be issued a receipt, entitling them to claim a respective portion of the migration allocation at the end of the migration. During this time, both Foundations will sustain POL to allow participants to purchase OATH and GRAIN for the migration, as well as for existing users to sell their OATH and GRAIN, should they wish to exit. The model comes from the recent Morpheus Swap PILLS migration to the Morphex MPX token that was executed successfully early last year, with some amendments to account for the two tokens. Details will be shared as they are confirmed.
Migration Tokenomics
1. The maximum supply of the new token will be 100,000,000.
2. Migration tokenomics have been designed to be commensurate with original OATH and GRAIN tokenomics, and in favor of participants of the OATH and GRAIN migration, ensuring a beneficial end state. The allocations for the new token are shown in the graphic below.
The proposed tokenomics architecture. This is subject to change.
3. Migration 40%: At present, approximately 37% of OATH and 28% of GRAIN max supplies are in circulation. If every single token is migrated, the 40% migration allocation means that all users will receive a greater portion of the maximum supply upon migration. Tokens that are not migrated will result in users receiving larger portions.
4. The ratio of circulating supplies is 43:57 :: GRAIN:OATH, so migrating tokens will be accounted for in a commensurate ratio.
Visualizing the breakdown of OATH and GRAIN allotments within the Migration’s 40% tokenomics allocation. This is subject to change.
5. Ecosystem Grants 15%:These grants will be used to support efforts to improve adoption and utility for the new token, including new projects built on our ecosystem, new integrations, or marketing efforts.
6. Strategic Partnerships and Strategic Reserves 15%/15%: There is currently 63% and 72% of OATH and GRAIN not in circulation. Under the new token, only 30% will not be in active circulation, and will be used for B2B engagement and partnership to support the ecosystem.
7. Liquidity 10%: OATH and GRAIN originally committed 8.8% and 10% to liquidity, respectively, so the new token will reflect this percentage of maximum supply. Only a fraction of this will be used at TGE, with more liquidity being added as tokens enter circulation.
8. Launchpad 5%: Launchpad tokens will be used to make the new token available to the public at a preferred rate with vesting terms.
9. The unified token will have zero emissions. Allocations will be granted to the migration, fund raising, strategic partnerships/reserves, and liquidity. Once rollout is complete there will be no programmed inflation, and tokens will be distributed ad hoc through governance.
Vesting OATH and GRAIN
1. At the conclusion of the migration, remaining OATH and GRAIN will be deprecated. We acknowledge that users, including team members, may still have vesting allocations from respective LGEs.
At the end of the migration, a snapshot of unclaimed OATH and GRAIN from respective vests will be taken. Under the same conditions of the migration, allocations of the new token will be distributed.
The current idea is via a claimable 12 month vesting NFT (scaling OATH and GRAIN vests down to 1 year). This will allow users to trade away their vests if they wish to exit the ecosystem, or purchase vesting NFTs to increase their exposure. Alternative plans are being considered, including carrying over the vesting timelines, or vest-to-wallet deployment instead of NFTs. We welcome discussion.
Ethos Reserve will feature an integrated lending market, building on integrated benefits similar to Aurelius.
Existing Products: Ethos Reserve
1. Ethos Reserve V3 will feature an integrated lending market, akin to Aurelius, along with new features (to be announced), and will launch its own independent token, similar to Aurelius.
A. The benefits of the new unified token will be realized as existing OATH holders will receive a large portion of the new Ethos Reserve token. While existing users who migrate their OATH to the new token will benefit from all MRP deployments, an increased allocation of the new Ethos token will be committed to further compensate OATH holders.
B. The new Ethos Reserve token will maintain our Minimum Viable Issuance strategy to focus on the growth of Ethos Reserve, as opposed to growing the entire OATH ecosystem.
Ethos Reserve will feature an integrated lending market, building on integrated benefits similar to Aurelius.
Existing Products: Granary
1. Existing Granary deployments will continue to operate and be maintained and, in the absence of the GRAIN token, may emit treasury assets should it be deemed necessary (for example, to incentivize lending markets or liquidity).
Should an MRP be deployed on a chain with an existing Granary Silo, that Silo will be absorbed/replaced with the integrated system. User safety remains the priority and funds will always remain available to be withdrawn.
Users can own MRP-specific tokens for targeted value, or stake the new token to serve as index exposure.
Future Products
1. Regarding token launches, we have learned that liquidity generation and token release should be a part of the product launch strategy. This isolates market activities between deployments, while allowing incentives to be directed specifically for the growth of respective products.
Similar to the Magpie model, users can hold the top-level token as index exposure to the entire ecosystem, or pick and choose which subsystems to which they want concentrated exposure via the MRP tokens.
The OATH and GRAIN Foundations are working diligently to balance user and protocol opportunity, security, and forward-looking outcomes.
Conclusion
Everything presented herein has been discussed internally and justified under the guidance of best outcome. However, we remain open-minded, and community members who disagree with part of the, or the entire, plan are encouraged to voice their concerns. We only ask that concerns be accompanied with alternative approaches for consideration and discussion.
