For a few months now, tons of “Fork OHM” emerged, making people dream of the easiest x10 of their life. Why so ? Because that’s exactly what happened with OlympusDAO.

First of all, a little bit of context. DeFi is supposed to be not correlated to traditional finance, but in reality it is not the case. Indeed, most people use stable coins as the “safe” coins to dodge cryptocurrencies volatility. What’s the point of using decentralized finance if the money you get is controlled by the classical finance entities ? That’s the question OlympusDAO tries to solve: create a currency that could be used as a kind of stable coin, but not correlated to classic currencies.

DAO stands for Decentralized Autonomous Organization is an organization created on the blockchain, called “autonomous” because it is defined by the rules written in the smart contracts, making the organization keep living even if no one is in there. The only change that can be done in those rules are based on democratic choices made by the members of the organization. In the case of OlympusDAO, the governance token is $OHM.

While most stable coins are backed the US dollar, $OHM is backed by other crypto-assets. The protocol says that 1 $OHM has to be backed by at least 1$ of crypto-assets. The current backed price of $OHM (about 70$ when I write this) is calculated regarding the number of $OHM tokens and the value of the treasury of the protocol, which is mainly composed of DAI.

However, the price of the $OHM is way higher than the actual backed price. Why so ? People who buy $OHM at such an high price bet on the future, as they can stake it with a very high APY, and doing so, they lock tokens meaning that the circulating supply decreases. For the protocol, the gap between the current price and the backed price allow people to have an interesting ROI by bonding.

The aim of this kind of article being giving a quick sum up of what a project is, I will not be very complete in there. Nevertheless, I cannot talk about OlympusDAO without talking about how the treasury is being created.

The protocol proposes to stake your $OHM at a very high APY (about 3600 % when I write this article, still months after the launch). This is not usual staking stuff, as it is based on rebase and bonding, but the result remains the same, you earn $OHM for locking your $OHM in the protocol.

The bonding is a new DeFi feature brought by OlympusDAO. It allows people to buy directly their $OHM tokens on the OlympusDAO app rather than on a DEX at a lowest price than the current price. In return, the bought tokens are locked for 5 days, being unlocked linearly during those 5 days. Doing so, the protocol tries to avoid the sell pressure.

You can bond by giving DAI, ETH or other mainstream tokens. A part of these tokens go to the protocol treasury at a 1:1 ratio, meaning that if you bought 10 OHM for 2000 DAI, 10 DAI goes to the treasury, and the remaining tokens go as rewards to the stakers.

OlympusDAO also allows people to bond using LP tokens. Doing so, the protocol is owning the huge majority of the OHM-XXX pools and can control the circulating flows, and earning the fees linked to these pools.

(3,3) is a principle that became very famous when we talk about OlympusDAO or any of its fork. What is it ? You can see it as a game between two players with the following rules :

This principle says that if both players are staking or bonding, they are both winning because they both earn money (and so does the protocol as the token goes up). However, if one of them, or both of them, sells its token, they lose money, and so does the protocol. I deliberately summarize very simply as my goal is not to be exhaustive or whatever, I just want you to get the main principle.

I briefly want to talk about all the OHM forks that emerged more or less recently, as it used to be the “Fork OHM season” for the past few months. I personally believe that none of them truly launched their protocol by thinking Well, OlympusDAO is an interesting project, but here are its problems, and this is how we are gonna fix them. They just saw how the $OHM token touched the sky and want a part of the cake. I might be wrong, or exaggerate a lot, but I bet that all this fork season has brought is short-term money for people who managed to be whitelisted in one or many of these forks without being rugged, and I am lucky enough to be one of them.

Now that I have close the parenthesis of the OHM forks, we can close this article. OlympusDAO raised an interesting problematic : what’s the point of using DeFi if all you get is US dollar which is being controlled by classical finance, which is exactly what you try to escape using DeFi. Having a reserve currency only backed by crypto-assets looks like a good solution to have a new stable coins that would not be correlated by US dollar.

But actually, using USDT, DAI or any other stable coins as “safe” coins is quite logical, because at the end, what you try to do, even using DeFi, is getting more dollar. What would be the point of using $OHM as stable coin if you cannot use it for anything, and even worse, if the price of the $OHM keeps decreasing.

Rather than becoming the new stable coin, it just becomes a new line in your wallet that lost value over the time, with no buy pressure, nor utility. Moreover, the $OHM being backed in a big part by DAI, makes that the promise is not kept, as it is still largely correlated to US Dollar.