Network - Ethereum
Date Launched - 24th March 2021
What is Olympus DAO?
Olympus is a decentralized reserve currency protocol based on the OHM token. Each OHM token is backed by a basket of assets (e.g. DAI, FRAX) in the Olympus treasury, giving it an intrinsic value that it cannot fall below. Olympus also introduces unique economic and game-theoretic dynamics into the market through staking and bonding. Read more about the game theory aspect of Olympus in one of our blog posts.
OlympusDAO aims to solve this by creating a free-floating reserve currency, OHM, that is backed by a basket of assets. By focusing on supply growth rather than price appreciation, OlympusDAO hopes that OHM can function as a currency that is able to hold its purchasing power regardless of market volatility.
At a high level, OlympusDAO consists of its protocol managed treasury, protocol owned liquidity, bond mechanism, and staking rewards that are designed to control supply expansion.
Bond sales generate profit for the protocol, and the treasury uses the profit to mint OHM and distribute them to stakers. With Liquidity bonds he protocol is able to accumulate its own liquidity. Check out the entry below on the importance of POL
How does Olmypus DAO work?
Our goal is to build a policy-controlled currency system, in which the behavior of the OHM token is controlled at a high level by the DAO. In the long term, we believe this system can be used to optimize for stability and consistency so that OHM can function as a global unit-of-account and medium-of-exchange currency. In the short term, we intend to optimize the system for growth and wealth creation.
There are two main strategies for market participants: staking and bonding. Stakers stake their OHM tokens in return for more OHM tokens, while bonders provide LP or DAI tokens in exchange for discounted OHM tokens after a fixed vesting period.
Governance participants can get involved on our forum and through discussions on our community discord and DAO discord servers respectively. We are always looking for new community members to contribute!
The main benefit for stakers comes from supply growth. The protocol mints new OHM tokens from the treasury, the majority of which are distributed to the stakers. Thus, the gain for stakers will come from their auto-compounding balances, though price exposure remains an important consideration. That is, if the increase in token balance outpaces the potential drop in price (due to inflation), stakers would make a profit.
The main benefit for bonders comes from price consistency. Bonders commit a capital upfront and are promised a fixed return at a set point in time; that return is in OHM and thus the bonder's profit would depend on OHM price when the bond matures. Bonders benefit from a rising or static OHM price.