The use of money has evolved numerous times in different eras. From shell to metal coin and a piece of paper, money indeed had come in the form of various faces. Frankly, the tangible money itself has no value, and its value merely depends on the degree of importance that people place on them.
Seashells were used as money (a mode of exchange) to buy things in ancient times. Since seashells could be traded for food or tools, it technically represents them. As time went by, people began utilizing rarer items like metals (e.g., silver or gold).
Gold actually backs the US dollar before, so every dollar has its own equivalent of gold. This means that anyone could trade in a dollar for gold. Later, the dollar became backed with silver and eventually ended up not being backed by much. This only shows that the value of a dollar (money) only holds value for how people perceive them.
The government has control over the number of money to be circulated, affecting the worth of the currency. The biggest question here is— will such reserve currency protocol work on digital assets too? This is where Olympus DAO enters the scene.
Olympus DAO’s game plan is pretty simple, at the same time, ambitious: To become the decentralized reserved currency. To put it simply, if people perceive Bitcoin as the digital gold currency, then Olympus is the currency pegged to it. Olympus strives to be used as a based pair in swapping and pooling while remaining stable and highly liquid.
Introduction to Olympus DAO (OHM)
Olympus DAO might be DeFi’s answer to mercenary liquidity and eventually, become the future of money. The native token of Olympus DAO is the OHM token, which was currently backed by the DAO token.
Before we dig a little deeper, it’s important to know the difference between being “backed” and “pegged” to something.
Once you buy a stable coin, such as USDT, that coin is pegged to the US dollar since once Tether costs 1 USDT. Oppositely, once you give them USDT, they will give you a dollar. This appears to be an open exchange that allows trading of the United States dollar to and from the blockchain. This is what it means to be pegged to a currency.
On the other hand, OHM is backed by a basket of crypto assets in the treasury, including dye fax and raptor Ethereum. This gives an OHM floor or bottom value, where backing assets will retain the price until supply rises.
Olympus DAO’s market value of treasury assets is around 700 million dollars, and every OHM is backed by $178 worth of assets.
OHM Staking and Bonding
Treasury is what allows the purchase of bonds—which is essentially the mechanism that enables you to buy OHM tokens from a treasury, but with a discount. To be eligible for the discount, you must pay for another token or coin (e.g., Ethereum).
For instance, you want to buy an OHM, and 1 OHM is equivalent to $10,000. The treasury will give you the perks of getting hold of it with just $9600, about a 4% discount. However, have to wait for about 5 days to receive all the OHM.
Basically, 1 DAO is a stablecoin that is worth $1, and since 1 OHM is supposed to be worth 1 DAO, when the treasury sells you a token worth $9600, about $9599 will be handed over to the treasury.
Bonding is what earns OHM a decent amount of money while giving bonders a chance to earn a profit. Olympus will permit the creation of OHM tokens as long the price is pegged to $1. The only risk in this kind of investment is the chances of having the prices of OHM fall.
One good thing about this is that you can sell liquidity pool tokens to the treasury for discounted OHM, allowing the treasury to own more of the total owned liquidity. This makes it possible for the protocol to earn fees that traders pay when buying or selling an OHM, showing that Olympus is indeed making a decent amount of money.
Staking is essentially a mechanism of locking up cryptocurrencies in order to acquire rewards and gain interest. You just need to deposit your OHM to gain more OHM. Compared to the centralized finance which we have now, staking is somehow similar to time-deposit. Staking takes OHM off from the market, minimizing the total supply. Nevertheless, it benefits holders of earning the extra printed tokens.
Buying bonds and staking doesn’t mean you are selling, so although the total supplies increase with every rebase, the value of OHM isn’t getting influenced by the escalating supply.
Every time an OHM is backed by more than its standard value, it just prints extra tokens and gives them to stakers. Elseway, if OHM is backed less than it needs, it will begin to buy back OHM.
LP Rewards
Olympus controls a big chunk of OHMS liquidity, about 99.8%, because of the bonding mechanism. This served as the passageway for them to get a hold of almost 100% of all the trading fees, allowing them to earn a hefty amount of money by merely having people buy and sell tokens. The trading fees serve as the major revenue source of Olympus, and this helps the OHM treasury to back its tokens.
The (3,3) Meme
The 3,3 might seem nothing, but it actually represents something significant. It exemplifies an idea from a game theory that is somehow a philosophical thought process of taking the victory in games through human behavior and economics.
As a brief background to this concept, let’s tackle what a prisoner’s dilemma is. For instance, two partner criminals have the same options, either to cooperate or not. If one criminal cooperates, he will serve a better sentence, but the other one will suffer the worst punishment. If both of them cooperate, they will suffer the same worst penalty. If both of the criminals deny the accusation, they both can get off the hook easier.
However, the dilemma present here is that the criminal doesn’t have any idea what their partner in crime will choose.
To put it simply, if one confesses and the other doesn’t, it will be beneficial to the one who confesses and disadvantageous to the other. Alternatively, it would be equally bad for both criminals if they both admit to the crimes. If both of them deny the charges, they will both receive the best possible treatment. According to game theory, on chances that the criminals are both rational, they should select the latter mentioned option.
Olympus extended the game theory matrix into a 3×3 matrix using the same theory. The best possible case within the matrix is when you and everyone else in the blockchain stake the token, while the worst-case scenario is when everyone puts their holdings on sale.
What Lies Ahead of Olympus DAO
Rather than timing the entry price, it is better to point focus on the amount of time you would like to spend in OHM. The reason behind this is the mind-boggling 7,000% annual percentage yield of having OHM. You don’t need to time the market, but only to wait for a year to grow your money.
This project started as a mere psychological experiment but slowly turned into a concrete host of stabilizing forces such as inter-DAO reliance, concentrated liquidity, treasury growth, normalization, and verticalization, which all collude to make OHM a legitimate asset.
The future of Olympus DAO remains unknown, but one thing is for sure: this project can last a whole lot longer than what doubters would like.
