Olympus DAO (OHM) – Read all about this DeFi 2.0 project =

What is Olympus? Often beautiful things come from a loss. In the case of Olympus DAO, that is the lack of a real store of value asset in the crypto world . An asset that always retains its value and grows in value over time. OHM from Olympus DAO must offer the solution.

You already have cryptocurrency that resemble a store of value, for example stablecoins. But these are linked to a certain fiat and will also decrease in value if the fiat is inflated. In addition, the value does not increase either. With Bitcoin (BTC) the value increases, but can also suddenly drop, so this is not stable. The team behind OlympusDAO thinks they can create a true store of value asset with treasury-backed token OHM.

With the mechanism to enable this store of value asset, Olympus DAO also goes a step further in the possibilities with DeFi applications. This is why this protocol is called a DeFi 2.0 project. Olympus DAO is thus seen as the first of a next generation DeFi . Time for an extensive explanation about this trendsetter in the crypto world. In this article you can read all about Olympus DAO, the great opportunities, but also the risks of this protocol.

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  • View quickly
  • What is a treasury backed token protocol?
  • What is protocol-owned liquidity?
    • Bonding with LP tokens
    • The risks of DeFi
  • Staking and Bonding on OlympusDAO
    • Strike
      • How to stake on OlympusDAO?
    • Bonding
  • Olympus PRO
  • OlyZaps
  • Team and DAO governance
  • Conclusion

This video explains what OlympusDAO is:

 

What is a treasury backed token protocol?

A treasury is a treasure chest. It is the reserve that backs or backs the balance sheet in a company or country. The token OHM therefore has a treasury as a backup. What does this backup treasure chest consist of and how is it filled?

In the case of Olympus, the treasury consists of DAI tokens. This token is a kind of stablecoin. The good thing about a stablecoin is that, unlike other cryptocurrencies, it retains its value. They are connected one to one with a fiat. This keeps the stablecoins, as the name suggests, nice and stable. You need these stable coins if you want to make cryptocurrency mainstream in an economy. For example, you can pay a salary with a stablecoin. Otherwise you could buy a house with your salary one month and barely pay the energy bill the next month.

A stablecoin is of course also very useful for building a treasury that supports your tokens. That way your treasure chest doesn’t evaporate from one moment to the next. Due to this treasury of stablecoins, the OHM has a fixed underprice that it cannot fall below. But the beauty of the construction with a treasury is that the value can grow.

OHM is backed one to one with DAI. “Backed” and not “pegged” and that’s the difference. Pegging is another construction that allows cryptocurrency to be linked to a fiat or other coin. The difference with backing is best explained in a formula: Pegged means 1 OHM = 1DAI, backed means 1OHM >= 1 DAI. 1 OHM is worth at least 1 DAI by backing, but could be worth more.

This ensures that the OHM with a basket or treasury as support is a suitable coin to use as a store of value. But it also offers interesting possibilities in DeFi applications. For this you must have a well-stocked treasury that is replenished and cannot simply disappear or be emptied.

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What is protocol-owned liquidity?

To guarantee a well-stocked treasury, the team behind Olympus DAO has devised the principle of protocol owned liquidity . Liquidity is owned by the protocol through a trading system. With previous DeFi products, as a token holder you make liquidity available to a pool. As a reward you received tokens for this. However, you remained the owner of the tokens made available. In bonding , Olympus DAO’s liquidity mechanism, the protocol buys up the liquidity of token holders.

The token holders have the advantage that a fixed price is charged and a favorable price. For the delivered tokens you get OHM. Because the protocol really owns the liquidity, this is more controllable and remains guaranteed. The OHM tokens can be exchanged for your original tokens after a certain fixed period. This is called redeem .

Bonding with LP tokens

The great thing about bonding is that Olympus also accepts LP tokens for this. These are liquidity-providing tokens. If you are somewhat familiar with DeFi, you may already know that you get these types of tokens when you make tokens available for liquidity pools on a decentralized exchange. This is possible, for example, at UniSwap. If you have these LP tokens, you probably also know that you can’t do much with these tokens other than just store them in your wallet. But now comes the nice thing about bonding at Olympus: you can sell these LP tokens to the Olympus protocol and earn OHM on this.

The bonding principle therefore ensures a treasury or treasury that is sufficiently filled to guarantee the value retention of OHM. But this treasury affects something else: the APY, or the Annual Percentage Yield . This is the percentage by which staked tokens within a protocol increase in value in tokens in a year.

Staking is an important DeFi principle. It’s not that complicated in itself what happens when you strike. You hold or secure tokens. By holding them to a protocol, this protocol also retains value. It’s a bit like the old system of keeping your money in a safe deposit box in the bank. If everyone does that, enough value will remain in the bank to provide mortgages, for example.

Within a protocol, holding tokens also ensures value retention. Also, if many tokens are staked, the chance that the price drops due to rapid sales of many tokens is smaller. Just like with the bank, if you leave money in your savings account, you will receive interest.

At least that’s how it used to be, nowadays you get little interest. Especially if you compare this with the Annual Percentage Yield. OHM staking APY currently stands at over 7000% percent . Due to the bonding system, the treasury is of such a size that it is prognostic that these kinds of percentages can be paid out.

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The risks of DeFi

There are, of course, a few words of warning here. Because DeFi and compounding offers enormous opportunities, but also carries great risks. No matter how secure or sound a protocol is, the risk of loss of value or a hack or back pull can never be completely ruled out.

So make sure you know what you’re getting into, what you’re doing and only step into what you can spare with power. Our crypto mastery group is a good start if you want to see where your opportunities lie with DeFi or other trends in cryptocurrency. Our experts and also the Mastery community are happy to help you!

Staking and Bonding on OlympusDAO

How does this work in practice, staking and/or bonding on OlympusDAO? Because these are the two mechanisms by which the protocol guarantees its treasury. This allows you as a user to generate income on OlympusDAO. Below we show in broad terms what you need for this and how this works.

Strike

Withdrawal follows the same principles as other protocols. If you stake OHM tokens, this will happen on the website and within the environment of the Olympus protocol. Often your tokens stay in your wallet when you stake them, but Olympus does that on the site.

You will also receive sOHM tokens for the tokens you stake . These are actually a kind of proof of your investment. They are similar in function to the LP tokens that you receive as proof of investment on a decentralized exchange.

When you want to unstake tokens, you hand in the sOHM tokens. These are then automatically burned or destroyed. This way you can never submit it twice and no false values are created in the system.

Before staking you receive rebase rewards , which is the yield or interest for your stake. This works with automatic compounding. Giving the rebase reward is automatic and you will see the balance of your tokens grow. The size of the rebase is determined by the APY.

The advantage of staking and the associated APY, especially with a high APY, is that a possible temporary drop in the price of a token has less impact on your profit in the long term. The amount of tokens increases and compensates for this possible loss in whole or in part.

Due to the construction of a treasury-backed token such as OHM, you can also assume a certain underprice of the token. As a result, your token can never just go from 1 dollar to a price with ten zeros after the decimal point. Of course, this never gives 100% guarantees, but it does make it more reliable.

How to stake on OlympusDAO?

To strike OHM you of course need OHM and it is available on various exchanges. The Olympus DAO protocol is built on the Ethereum Network. That is why you can use UniSwap or SushiSwap, among others, but also Gate.io, Hoo.com, AEX and Bitrue. Before purchasing OHM somewhere: check carefully what the transaction costs or fees are, as this can differ per DEX.

On the Olympus DAO site, go to the Stake tab. Make sure that your wallet with OHM is linked to the site. Clicking on Stake will take you to a screen where you can indicate how much you want to stake. Here you will also find a lot of data that is important to keep an eye on when you stake.

For example, you will find here the time when the next rebase will take place, so when something will be added to tokens on your balance. The rebase time is every 8 hours. So your staked tokens will get to work for a neat working day to increase your income.

You will also find the current APY of that moment here. Based on that APY, the rebase yield is credited for that rebase time. In addition, you will also find here what is currently deposited for staking. That is almost 2.5 billion USD in December 2021, so a nice treasury.

The current index is also a number to look at. This indicates how often an OHM token would be paid out if you had staked it from the start of Olympus DAO. In December 2021 this is 44.9 OHM. So almost 45 times the amount of the first token staked.

Bonding

When bonding, you add liquidity to the protocol and treasury through a sale to the protocol. Which tokens does Olympus DAO want to bond now?

  • LP Tokens – These are tokens you get when you provide Liquidity to pools on a decentralized exchange. You often give tokens in trading pairs. Bonding is possible with the following LP tokens: OHM-Weth LP, you get these LP tokens if you provide wETH and OHM tokens as liquidity. This is possible, for example, at the pools on Sushiswap. Bonding is also possible with OHM-FRAX LP tokens. These are liquidity providing tokens from the OHM-FRAX pools. These can also be obtained by providing liquidity to these pools on, for example, Sushiswap.
  • DAI – This is a multi-collateral stablecoin, which means that the token is backed to a number of assets, making the price stable. DAI is MakerDAO’s token and is available on SushiSwap, among others.
  • FRAX – FRAX is a fractional algorithmic stablecoin. That may not tell you much, but an algorithmically bound stablecoin maintains the value of the stablecoins via algorithm. As a result, inflation of the underlying fiat has less influence. This stablecoin is available on Solarbeam, Uniswap and SushiSwap.
  • wETH – This is a wrapped token of Ethereum (ETH). By wrapping a token, it can also be used in other ecosystems that are not built on Ethereum. You can buy this wETH in Sushiswap.

In the future it will probably be possible to use other tokens for bonding on the platform. By clicking on Bond on the main page you will see the different possible tokens to bond with. Clicking on one of these will show you how much you get for your tokens worth of OHM. After a specified period of time, you can exchange the OHM back for the tokens that are tied. By clicking on redeem , you exchange back.

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Olympus PRO

Bonding and staking are currently the main activities on the platform. But the platform offers more possibilities, also for developers and other protocols. Olympus PRO makes it possible to implement the bonding and staking mechanisms and the treasury backed protocol of Olympus on other platforms. For example, Abracadabra.money is a lending protocol which also uses the bonding mechanism and treasury backed protocol.

OlyZaps

A new addition to the possibilities on the Olympus platform is OlyZaps. With this you can zap any asset you want, i.e. trade it for sOHM in a single action. This way you can strike very quickly. The intention is that you will soon be able to bond in this way as well. OlyZaps was only just added in December 2021 and is therefore still in development.

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Team and DAO governance

OHM launched in March 2021. The tokens then had the price of almost 485 USD. All Time High was reached in April with over 1415 USD. After that, the price dropped again. What is also important for the success of a project is the increase in market capitalization. This has grown from a market capitalization of more than 63 million to more than 4 billion USD in early December 2021.

Currently, as the name suggests, the protocol is controlled from a DAO. This is a decentralized autonomous organization. There is no central board of directors, but the organization is autonomous. A community controls the protocol. By means of proposals, everyone in the community can participate in thinking and making decisions. There is therefore no roadmap, Olympus is being further developed from proposal to proposal. The team implements these proposals, but also makes proposals of its own.

This team behind Olympus DAO is anonymous, but their technology and ideas make them well-known unknowns. The developer and founder of Olympus DAO hides behind the name Zeus, who was once the supreme god in the Greek Gods Olympus.

He also belongs to the circle around Frognation . Frognation is more of an idea than an actual group. It revolves around the idea of Popsicle.finance, Abracadabra.money and Wonderland founder Daniele Sestagalli. DeFi is for everyone and it makes the possibilities of the financial world accessible to everyone. Around the idea of Frognation is a group of developers who designed DeFi 2.0. Olympus DAO and Zeus form the basis of this.

DeFi 2.0 is the launch of a group of projects in 2021 that will take the capabilities of DeFi to a new level. The principle of bonding with protocol owned liquidity is an example of a DeFi 2.0 application. First-generation protocols have enabled the provision of liquidity in pools in exchange for LP tokens in crypto technology. Olympus DAO optimizes this concept by making the protocol owner of the liquidity.

The team behind this project is therefore anonymous, but certainly not unknown and their protocol and working methods appear legitimate. As you have already read, the protocol is well put together.

The project has already undergone a number of thorough audits and passed them with flying colours. An audit checks whether there are bugs or errors in the system that could make the protocol sensitive to fraud and manipulation. Olympus therefore has confidence, but of course can never give guarantees. So do your own research if you want to get involved in this project or any other project.

Conclusion

Mount Olympus was the abode of the gods in ancient Greece and a landmark or landmark in the area. OlympusDAO is also a marker in crypto’s turbulent history. With the treasury backed protocol and protocol owned liquidity, this platform takes DeFi applications to a new level. Although DeFi always carries the necessary risks, which you should always be aware of, this project has potential and the general confidence to be a success.

Do you already stake OHM or do you want to know more about the trends in DeFi 2.0? We are happy to continue the conversation at our AllesOverCrypto facebook group! You can also easily find the answer to a question about DeFi or blockchain in our FAQ. You can also quickly find your answer by googling your question + AllesOverCrypto!

 

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