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How to Generate an 8,269% APY Staking $OHM

Bitcoin was created by Satoshi as a transaction currency to be used in a peer-to-peer payment. However, the idea of decentralization is merely theoretical in Bitcoin, just like many other cryptocurrencies. Furthermore, using Bitcoin to buy implies that you are willing to forgo any price increase, and accepting Bitcoin as payment for a commodity means you can risk a price drop.

Hence, the introduction of stablecoins such as USDT and USDC pegged to Dollar were met with fanfare due to the reduction in volatility. Nevertheless, stablecoins pegged to Dollar are dependent on the rate of a centralized fiat system which defeats the decentralized nature of DeFi.

Enters Olympus DAO…

The year 2021 ushers in the redefinition and reapplication of DeFi. The DeFi market cap is growing exponentially to almost $100 billion this year. With users and holders of a token gaining the power to decide the fate of that token through voting and consensus, DeFi 2.0 is the practical aspect of DeFi 1.0. One important protocol included in DeFi 2.0 is the pro version of Olympus DAO.

You might be familiar with Olympus DAO because of the extremely high APY, of up to a six-digit figure of $200,000, it offers through staking its native token OHM. However, the project is one of a kind, and it has much more to offer than its incredibly high APY. What makes Olympus DAO unique? How can you gain from staking OHM? More importantly, what is the future of Olympus DAO?

What is Olympus DAO?

Olympus is a decentralized reserve currency protocol based on the OHM token. Olympus is supported by Protocol Controlled Value (PCV) in Olympus DAO. Olympus DAO’s OHM has a free-floating account unit to bring stability and transparency through decentralised finance that can maintain users’ purchasing power.

To maintain a stable purchasing power, OHM is backed by a basket of crypto assets in its treasury, including DAI, FRAX, OHM-DAI LP, OHM-FRAX LP, OHM-WETH LP, and wETH.

Olympus DAO is a community-driven decentralized autonomous organization (DAO) where the participants have the governing power to make decisions on the platform based on consensus. Olympus DAO’s treasury is not pegged to the US dollar but instead has its unique monetary policy where the value of OHM cannot fall below the asset it is backed with. The protocol mints OHM when it rises above DAI’s 1:1 value and burns OHM when it drops below this value. Consequently, the fall in the price of DAI and other assets that backed OHM does not translate to the fall in the price of OHM.

OHM has a community of followers known as Ohmies, which has continued to grow since its introduction on social media. This has increased the publicity around the token. Olympus DAO’s forum allows for discussion on proposals and sharing of ideas among the community members.

What is an OHM Token?

OHM is the utility and governing token of the Olympus DAO platform. Participants on Olympus DAO’s platform can bond and stake their OHM to earn rewards. However, they can also sell their token but staking OHM is the most beneficial to both the platform and the users.

Since OHM is a governance token, users receive sOHM, which has a 1:1 with OHM, when they stake. The earned sOHM is not tradable but also gives the holder power to be part of the decision-making in the ecosystem.

How does Olympus DAO’s OHM Token Work?

When Olympus DAO was launched in March 2021, staking OHM attracted a six-figure reward of almost 200,000%. Currently, 90% of OHM is staked, and stakers earn 8,088% APY. Seven months after launch, Olympus is one of the top DeFi protocols by market capitalization, but it is not traded on any centralized exchange. How does Olympus pay so much in APY, and how is the project sustainable? You need to understand the workings of the protocol.

Olympus owns all of its liquidity, and the protocol controls how much token is in the market at a time. Therefore, by design, a whale cannot take over ownership of the token or suddenly dump it in the market as they please. In essence, you can only get OHM tokens through Bonding and Staking.

  • Bonding

Through its bonding program, Olympus buys LP from investors to give back discounted OHM tokens. When you bond, the price of OHM you get is lower than the market value. Olympus protocol quotes the price they want to buy an LP share on the platform, and an investor decides whether to trade at that price or not.

It is entirely in the hand of an investor whether to accept the price quote, the amount of OHM tokens, and the vesting term for their LP share or not. After accepting, the share is then sent to the treasury in exchange for OHM. For instance, you can trade OHM-FRAX LP in the liquidity pool to get OHM. Users can redeem their rewards at the end of the vesting term.

Through Bonding, the Olympus community can acquire more Protocol Owned Liquidity (POL). POL is the liquidity of Olympus DAO acquired to boost its treasury and, in so doing, protect the interest of the investors. The protocol rebase can only go up. The reward rebase is compounded three times a day, and the monetary policy sets the value. Therefore, whenever an investor buys a bond, a new OHM is minted. The token is then distributed to the bonder, DAO, and the stakers. Finally, the profit from the bond purchase goes to the Olympus Treasury.

  • Staking

Stakers lock their OHM and receive the same amount of sOHM, which automatically rebases up after every epoch. The rebase rate ensures that one sOHM is the same as one OHM due to the minting of new OHM. Bonding and staking are mutually dependent. The rebase rewards stakers acquire are generated from bond sales, and the more OHM staked, the higher the price of OHM, which increases the number of OHM bonders get in exchange for the LP shares. Currently, investors can earn up to 8,088% when they stake their OHM.

Meanwhile, stakers of OHM were earning as high as 200,000% on their stakes at launch. This translates into that the more OHM staked, the lower the APY but, the higher the price. This is a way Olympus seeks to protect stakers investment so they can always gain.

Stakers can unstake their OHM anytime to stop receiving rebase rewards. When this happens, the protocol burns sOHM, and the user gets the equivalent amount of OHM. Note that you will eventually reach a risk-free premium if you stake your OHM for a more extended period.

What Makes OHM Unique?

OHM is a free-floating algorithmic reserve currency that is unique as it serves as an alternative to both stablecoins and other crypto-assets like Bitcoin with extremely volatile value. OHM is dissimilar to stablecoins because it does not depend on any centralized fiat currency to maintain its stable intrinsic value. Therefore, the inflationary effect of the Dollar cannot affect the price of OHM like other stablecoins.

While the value of stablecoins pegged to the Dollar is affected by the policies made by Federal Reserve and the US government and the growth or fall in the US economy, OHM shall maintain its stability and decentralization. More so, the purchasing power of OHM is designed to grow in value regardless of market condition continually. In addition to this, there are other unique features of OHM.

  • Treasury 

OHM’s treasury comprises DAI, FRAX, OHM-DAI SLP, OHM-FRAX LP, which currently has a market value of about $800 million. Although DAI is a stablecoin, it is now pegged to the USD and other crypto-assets like ETH. Likewise, FRAX is a reserve coin that is partially stabilised algorithmically and partially backed by collateral. One source of income to the Olympus treasury is LP fees.

Olympus earns its LP fees because it owns 99.5% of its liquidity. Like the US Federal Reserve with US Treasury Bonds, dollars, gold, and foreign currencies to boost her treasury, Olympus DAO’s OHM token uses these assets to ensure price stability and control its monetary policy. The protocol uses its treasury inflow to increase the treasury balance.

  • Not Pegged But Backed

Other decentralized currencies back OHM, and it is not dependent on one asset, so its value will always be above the value of the assets it is supported with. The protocol has a floor price of 1 DAI to 1 OHM. However, the value of OHM is not pegged to that of DAI, and if OHM trades below DAI, the protocol will buy back the OHM and burn it.

Conversely, if the price of OHM rises far above 1 DAI, the protocol mints new OHM and sell to the market to control supply. Note that since DAO is community-driven, the decision is made by participants using the governance token.

  • Free-floating market

The price of OHM tokens is determined mainly by a free market. It has Risk Free Value (RFV) that grows by more than 1 million daily in its treasury to protect participants in the protocol. The RFV determines Olympus DAO’s bond prices. That is, the price of bonded LP shares is based on the RFV of the protocol instead of the market value to achieve equilibrium.

Where can I stake OHM?

You can stake OHM on the Olympus staking page, but before you can stake, you need to buy ETH and DAI and exchange for OHM tokens on decentralized exchanges like Uniswap and SushiSwap. The decentralized exchange will deduct the approval fee, which varies, so if you do not have enough, do not initiate the transaction.

You only need to “Approve” if you want to swap OHM for the first time; you would not need to “Approve” after the initial swap. After it is approved, you will need to pay the transaction fee in ETH. Again, if your ETH balance is too low, you cannot proceed. While you can swap any currency to OHM, it is preferable to exchange DAI to OHM to avoid slippage.

 How do I stake to gain 8,269%?

After you have gotten the amount of OHM you want, visit the Olympus DAO staking page on your browser or download the Olympus DAO app and go to the “stake” page. On the page, you will see “connect your wallet”. You can either connect using your MetaMask wallet extension address or scan your wallet address QR code. After this, click on “Approve”.

Your first time staking OHM will attract a fee, but subsequent staking is free. Proceed to stake your OHM by clicking on “stake OHM”. Your OHM is sent to the staking contract, and you will receive staked OHM (sOHM). According to Olympus DAO, the price of OHM is likely to reduce with time, but due to the high APY, investors will still make a profit.

According to Olympus DAO, if you buy an OHM token worth $400 today and the price drops to $2 in a year with a 2% daily compound interest, your OHM would have grown to 1377 by year-end. Your OHM will be worth $2754 after a year, and you will be making a profit.

You can only hold and unstake sOHM and cannot transfer or sell it. The amount of sOHM you receive is in a 1:1 ratio to OHM. If you would like to unstake your OHM, just click “Unstake”, and you will receive the value of OHM you stake plus the reward.

After you have staked your OHM, you will see your APY, next rebase, the reward yield, current index, TVL, staked balance, balance, and ROI. You can track your rebase on the Olympus DAO staking page with your current index. The Next Rebase shows the remaining time until your next rebase. The Staked Balance shows the balance of your staked OHM, while Your Balance shows how much of your OHM is left unstaked.

What Does the Game Theory (3,3) Means in Olympus DAO?

Olympus DAO is analyzed using game theory to depict what will happen if investor bonds, stake or sell their OHM. Each action is given points to show the relevance in the protocol. Staking OHM attracts 2 points, Bonding is 1 point, while selling OHM attracts a -2 point.

Shown above is the effect of actions carried out by two actors in the protocol. Investors who stake their OHM gain the most as their action has the most benefit in the ecosystem. On the other hand, selling OHM is bad for the platform. Therefore, bonding and staking are considered good behaviour, while selling is bad behaviour. Since staking drives the price of tokens and OHM increases the number of tokens in the market, they are suitable for the investors and the protocol. However, selling OHM drives the price down in the market.

Is OHM a Ponzi Scheme?

When you hear of the huge percentage of APY offered by OHM, the first thing that comes to your mind is to ask if it is a scam designed to lure in investors. The introduction of OHM has witnessed some criticisms from certain corners about how it is probably a Ponzi scheme. Despite the promise of an enormous APY, Olympus DAO is built to be sustainable. More so, the price and the APY accrued from OHM are set to decrease over time. Despite this, OHM holders will always because of the way the protocol balances price and supply.

A Ponzi Scheme does not have any form of an investment portfolio, and old investors are paid with the money invested by new investors. More so, Olympus DAO is backed by a basket of crypto assets and in partnership with such projects as Sushiswap, FRAX, LUSD, and Rari Capital. Therefore, Olympus DAO is legit and not a Ponzi scheme.

What Is The Future Of OHM?

Although Olympus DAO’s is an experiment, its OHM is scalable. The project just launched Olympus Pro. The DeFi 2.0 Olympus Pro is set to ensure that Bonders make a profit from their bonds, and the protocol acquires more liquidity. This makes it a win-win for everyone involved. In addition, the project was designed to be sustainable over a long time, not as a competition to other stablecoins but as a truly decentralized currency that can maintain its purchasing power despite market volatility.

Should I buy OHM?

Firstly, do your research before you dive headfirst into any investment. While OHM is a unique and novel project, it looks promising. The monetary policy, yield mechanics, and the treasury system of Olympus DAO were designed with a risk-free mechanism that will allow it to withstand a bearish run. Nevertheless, since Olympus DAO is still very new, you should invest money you can afford to lose.

Wrapping Up

Olympus DAO is still in its experimental stage because it was recently launched. Also, cryptocurrency is filled with new projects that never succeed beyond a year. As time goes on, people might begin to pull out of the protocol.

However, Olympus DAO has considered this scenario and its risk-free value is set to protect the protocol in case it falls into a bank run. Therefore, the DAO’s algorithmic community-driven monetary policy and its many other peculiar features are worth exploring.




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