Olympus DAO is a decentralized autonomous organization that operates on the Ethereum blockchain. It was created to facilitate the creation and management of a cryptocurrency called OHM, which is used as a store of value and a medium of exchange within the ecosystem.
This project was launched in 2021 and it grew to become one of the most controversial DeFi projects. As the cryptocurrency ecosystem continues to evolve, it will be interesting to see how projects like Olympus DAO shape the future of finance.
This article will cover all of what it is about and how it works.
What is Olympus DAO?
In March 2021, Olympus DAO, also known as Olympus Decentralized Autonomous Organization, was launched with the introduction of its native ERC-20 token called OHM. The project conducted its initial offering through Discord and an initial decentralized exchange (DEX) offering (IDO). OHM is designed to function like a stablecoin but without being pegged to any fiat currency.
To provide context, stablecoins such as USDT dominate a significant portion of the DeFi landscape, offering a level of stability compared to other crypto assets. However, their widespread use in DeFi introduces dependence and control associated with Centralized Finance (CeFi).
The main goal of Olympus DAO is to provide a sustainable and stable currency that is not subject to the same inflationary pressures as fiat currencies.
One of the unique features of Olympus DAO is its “bonding” mechanism, which allows users to exchange other cryptocurrencies for OHM. This helps to provide liquidity for the protocol and ensures that the value of OHM is backed by other digital assets.
What is OHM Coin?
OHM is the ERC-20 native token of Olympus that is compatible with other Ethereum-based projects, and its users are called “Ohmies.” The OHM tokens are backed in the treasury by digital assets such as DAI, ensuring that the price of OHM remains stable, rarely falling below a threshold of 1 DAI.
One of the significant features of Olympus is the exceptionally high Annual Percentage Yield (APY) of up to 8000%, achieved through the Olympus protocol, which is a part of the DeFi 2.0 movement.
The protocol uses bonding and staking mechanisms to maintain the sustainability of its Liquidity Pools (LPs). The liquidity model owned by the protocol has been highly successful and has led to the emergence of multiple Olympus forks.
How does Olympus DAO work and operate?
Olympus DAO works by creating and managing a cryptocurrency called OHM, which is designed to provide a sustainable and stable store of value. The protocol is governed by its community of users, who can vote on proposals and decisions that affect the direction and development of the platform.
Also, its governance and bonding mechanisms enable Olympus DAO also to use a treasury system to manage its funds. A portion of the fees generated by the protocol is deposited into the treasury, which can be used to fund future development and growth initiatives.
The governance of Olympus DAO is controlled by its community of users, who can vote on proposals that affect the direction and development of the protocol. This allows for a high degree of decentralization and transparency, as all decisions are made by the community rather than a central authority.
Overall, Olympus DAO represents a new approach to currency creation and management, one that is community-driven, transparent, and sustainable. By leveraging the power of blockchain technology, it has the potential to disrupt traditional financial systems and create a more equitable and decentralized financial future.
Olympus DAO Bonding
The process of purchasing bonds offered by Olympus DAO is known as bonding, which allows users to receive discounts when buying OHM. It also provides an alternative way for users who cannot afford OHM to become OHM holders. Initially, DAI was the only supported stablecoin on the platform.
However, Olympus DAO now supports more stablecoins and cryptocurrencies, including FRAX and LUSD, as well as LP tokens such as OHM-DAI and OHM-FRAX. These assets help OlympusDAO manage its treasury through a Permanent Capital Vehicle (PCV).
The bonding mechanism plays a vital role in controlling the liquidity of OHM on other exchanges by imposing a lock-up period of five days on bonding users. This mechanism helps to reduce the direct sell-off of OHM by new bonding users and enhances the liquidity of other projects on the platform.
Olympus DAO Staking
Staking is the act of depositing OHM into the Olympus DAO treasury by OHM holders when the value of OHM is higher than 1 DAI. Olympus DAO ensures that this process provides stakes with new OHM rewards through rebasing and a high Annual Percentage Yield (APY). Currently, the APY stands at a remarkably high percentage of around 7,055%.
To know more about Olympus DAO staking, see this article about how to stake Olympus DAO like a pro.
Who founded Olympus DAO?
Olympus was founded by a person with the pseudonym “Zeus,” and the team operating behind the project remains anonymous. This is to promote decentralization by emphasizing the team’s participation as part of the DAO.
There are no CEOs, employees, or central authorities in the entire ecosystem, and the entire operation depends on Olympus DAO governance. Participants in the Olympus DAO are not subject to any laws or regulations and instead operate under the control of smart contracts or the protocol’s terms and conditions.
In Olympus DAO, all participants work together towards a shared goal, and all decisions are made through a voting system. This promotes democratic decision-making and ensures that everyone has an equal say in the direction of the project.
Olympus DAO Price
OHM’s trading history has been volatile. Prior to April 2021, OHM was trading between $384 to $830. The token’s value surged to a peak of $1,415 in April 2021, attributed to the positive news of institutional investments from companies like Tesla and MicroStrategy into Bitcoin (BTC).
However, OHM’s price dropped to $165 in May, following negative news such as China’s cryptocurrency ban and Tesla’s suspension of Bitcoin payments. Although the price recovered slightly, it dropped again at the end of July 2021.
OHM saw a second peak in mid-October, reaching $1,334 as the crypto market recovered, but crashed by over 95% to under $28 due to the overall bearish trend in the crypto market. As of 2023, there is still no indication of a price recovery for OHM.
OHM’s market cap currently stands at around $46 million, with a circulating supply of 1.66 million tokens, placing it at #2893 by market cap. This represents a drop of over 2000 ranks since its price crash.
Despite the bearish trend in the crypto market being the main cause of the price drop, the liquidation of leveraged long positions, including OHM, also put significant selling pressure on OHM holders.
Consequently, many investors and traders in the Olympus DAO community chose to exit their OHM positions, resulting in the sale of under 82.5 thousand OHM for almost 11.4 million DAI on the decentralized exchange (DEX) SushiSwap (SUSHI) in January 2021.
To get the most recent price on Olympus DAO, you can easily go to coinmarketcap to check.
What Is the Future of Olympus DAO?
Olympus’ innovative liquidity pool mechanism, which is controlled by the protocol, has inspired numerous imitators who use its staking rewards system to accumulate assets. The protocol’s ability to immunize OHM against inflation has also attracted many investors and participants to the ecosystem.
Olympus’ remarkably high and well-maintained APY has proven to be an enticing prospect for new users who feel motivated to join the platform and stake OHM.
The (3,3) meme, which gained considerable attention on Twitter in late October 2021, is also a topic of interest. This meme is derived from Olympus’ game theory, which presents users with different strategies to choose from, including staking (“+3”), bonding (“+1”), and selling (“-1”).
Combinations with a higher total value (e.g., (3,3), which represents pure staking) will result in a higher return, while combinations with a lower total value (e.g., (-1,-1), which represents pure selling) will have lower or even zero returns.
Several prominent investors and crypto enthusiasts have incorporated the (3,3) meme into their tweets or added “(3,3)” to their Twitter handles to encourage people to “buy and stake OHM” using this strategy, which allows users to continue earning high returns. This strategy has piqued the curiosity of various new users, who have been drawn to Olympus’ strong community, partly due to its DAO.
However, with OHM’s bearish market situation, several accusations and doubts about the project’s underlying mechanics have resurfaced. Some users claim that the decentralized reserve currency that Olympus DAO handles and the (3,3) meme from Olympus’ game theory are baseless.
Additionally, the abnormally high and guaranteed investment returns from staking in Olympus DAO have made people suspicious of whether the project is a Ponzi scheme. A Ponzi scheme is a type of fraud that relies on new investors’ money to pay older investors.
With the extended price crash, it appears that the suspicions of Olympus DAO being a Ponzi scheme were not entirely unfounded. Nevertheless, the project is still active, with developers working on new bonds and providing a sneak peek into their new dashboard.
However, it remains uncertain whether Olympus DAO will recover its previous highs as most cryptocurrencies do not rebound after a prolonged crash. But let’s watch out and see what the future hold for Olympus DAO.
In Conclusion
Olympus DAO is a decentralized finance protocol that aims to create a decentralized reserve currency with a self-sustaining liquidity mechanism. Its innovative protocol-controlled liquidity pool mechanism inspired various copycats, and its capability to make OHM immune to inflation attracted many investors and participants into the ecosystem.
The (3,3) meme introduced by Olympus DAO also gained considerable attention and encouraged people to “buy and stake OHM.”
However, despite its successes, numerous accusations and doubts about the project’s underlying mechanics have risen amid OHM’s bearish market situation.
Nonetheless, the project is not dead yet, and the developers are still working on it. Overall, Olympus DAO represents an innovative approach to decentralized finance, and its success will depend on the ability of its developers to address concerns and maintain the trust of its user community.