We've had a thorough discussion of this in the chat yesterday, and here are some points:
C. First use the funds to revive GS markets.
A lot of people believe that the GS events happened due to market manipulations by OMO and BSIP42 exacerbating the situation, as modified feeds disincentivised buying out of margin call orders.
As for how to proceed further:
Liquidity providing via dexbot sounds like an interesting idea, but we need clear rules on how it is going to happen, and automated contingencies on what to do when market begins rapidly falling or rallying. On traditional exchanges, liquidity providing works like this: MM is obligated to keep preset amount of liquidity in the books, until certain volume obligations are met. Then it can remove one of the sides.
Before we even start, we need to agree on what percentage of the funds can OMO use daily, and do a daily check if it was profitable or not (which is okay).
In our case we need something like that to happen once the market begins moving, for example. Bot places 30 orders on both buy and sell sides, but starts removing them from one side in case 10 of them are taken on one side, without getting an order taken from the other side (or something like that).
During sideways market provision of liquidity might be profitable. During movements contingency rules would limit the amount of loss. In case of profits I suggest some of them are taken and put back into the reserve pool, with the rest going to OMO fund, and its percentages readjusted accordingly.
If the strategy for the OMO is explicitly talked about, and clear then I would support such decision but not before.