Olympus v2

Olympus (OHM) is a decentralized autonomous organization (DAO)-governed reserve currency protocol based on the OHM token. OHM is the Olympus platform token. In the Olympus treasury, each OHM token is backed by a basket of assets such as FRAX and DAI. It is claimed that this gives an intrinsic value to the OHM token. A DAO is a governance mechanism for making decisions more collaborative and trustless.

Olympus is building a community-owned decentralized financial infrastructure to bring more transparency and stability. Additionally, the platform introduces economic and game-theoretic dynamics through staking and bonding. Game theory is a framework theory for conceiving social situations among competing players.

The platform aims to build a policy-controlled currency system in which the OHM token behavior is regulated at a high level by the DAO. In the long term, the platform believes that the system can optimize consistency and stability so that OHM can function as a medium-of-exchange currency and global unit-of-account. The platform intends to optimize the system for growth and wealth creation in the short term.  

According to the OHM documents, the lack of volatility in dollar-pegged stablecoins has rendered them an essential part of the crypto world. Mostly, users transact using stablecoins, as they hold the same amount of purchasing power today vs. tomorrow. The OHM platform mentions it as a fallacy because the dollar is controlled by the US government and the Federal Reserve; depreciation of the dollar means a depreciation of these stablecoins.

Interestingly, Olympus DAO aims to solve this by creating a free-floating reserve currency, OHM, backed by a basket of assets. The platform focuses on supply growth rather than price appreciation in the hope that OHM can function as a currency and, regardless of market volatility, can hold its purchasing power.

Olympus DAO consists of protocol-owned liquidity (POL), protocol-managed treasury, staking rewards, and a bond mechanism designed to control supply expansion. POL is the amount of LP the treasury controls and owns.

Further, Olympus DAO offers Olympus Pro, a new industry-standard platform for DeFi protocols to acquire their liquidity. Olympus Pro caters to liquidity problems by providing bonds-as-a-service for a small fee.

Olympus Pro is a service for protocols that strives to utilize bonds in the emissions programs with low overhead and maximum impact. The platform provides infrastructure, expertise, and exposure to its partners. Hence, projects only need to bring a token and an objective.

OHM was ideated by Zeus and built by a distributed pseudo-anonymous team.

Staking and bonding are the two main strategies for market participants on the Olympus platform. Stakers stake their OHM tokens on the platform in return for more OHM tokens. At the same time, bonders provide DAI or LP (liquidity provider) tokens in exchange for discounted OHM tokens after a fixed vesting period. Users can exchange their LP tokens for the governance token of the protocol at a discounted rate instead of staking their LP tokens for farming rewards in a pool. This is done by a process called bonding.

Staking is the prime value accrual strategy of Olympus. Stakers stake their OHM on the platform and get “rebase rewards” in return. The rebase can vary based on the reward rate set by monetary policy and the number of OHM staked in the protocol. In the rebase mechanism, the staked OHM balance increases automatically. Upon minting new OHM, a large portion goes to the stakers.

The stakers lock OHM and receive sOHM (staked OHM) upon staking. The sOHM balance rebases up in an automatic way at the end of every epoch. sOHM is composable with other DeFi protocols, as it is transferable. An epoch is a period within a blockchain network.

Upon unstaking, the users receive OHM equivalent to burnt sOHM. Unstaking involves the user forfeiting the upcoming rebase reward.

Bonding is the secondary value accrual strategy of Olympus. Bonding allows Olympus to accumulate its liquidity (POL). More POL ensures locked exit liquidity in trading pools to facilitate market operations and protect token holders.