Try Quests to earn cryptoA decentrlized central bank, which representing a decentralized cryptocurrency for using in crypto, That's what OlympusDao trying to achieve! but how? well, lets try to find out!
Zeus, The founder of OlympusDao, believes that most cryptocurrencies are not a real currency! $BTC and $ETH are to unstable for using as normal currency and are mostly using for value storing, and stablcoins like $USDT are under control of known organs and are effected by centralized banks, and don't give a true definition of being decentralized.
OlympusDao and $OHM token was Zeus's prefered solution to solve this!
As we said earlier, OlympusDAO is a decentralized central bank. To explain further, central banks produce their own currency, known as FIAT: dollars, euros and....
FIAT currencies were backed by gold (which was said at the beginning of their birth!), and that mean FIATs was the receipts for storing golds in banks, that mean when you had $5, that was equal to saving that much gold in banks.
That's the base model OlympusDAO follows, but instead of saving physical assets like gold, the protocol have its own treasury including cryptocurrencies like DAI, LUSD, FRAX and wETH.
Also the protocol generates $OHM token automatedly due to its own treasury value.
By the way $OHM token is not pegged to any other asset! The mechanism continue generating $OHM as long as the treasury value is more then 1 Dai. a little confusing? so lets know what is defnition of Peg.
When we buy 1 USDT token, the token is pegged to 1 dollar. That means give 1 dollar and get 1 USDT instead of it and vice versa, when we give 1 USDT, we get 1 dollar.
But the OlympusDAO does not work that way. For example, if 10 million $OHM is in circulation and the Olympus DAO treasury is worth 100 million dollars, it means that each $OHM is worth more than $10, which is much more than $1 per $OHM (that we talked about it above).
Thus, The protocol generates another 90 million $OHM for reaching the balance.
So in this example each $OHM token is backed by 10 dollars. (take a look the below picture please!)
High rate of generating $OHM can make a crash on its price? Yes, but OlympusDAO have the solution!
Most of generated $OHM goes for staking rewards and this leads to very interesting staking APY and is about %468 right now.
and of course it was a 4 fig APY in the early moths of the birth of the protocol! Which mean that users could get an easy 2x or even higher in just few days!!!
In fact more users for protocol means the $OHM will share to more people, and that's why to APY is getting lower.
Staking is one of the main ways to the main fundraising methods at OlympusDAO, the staking mechanism is based on prisoner game theory! (I don't know the native English name of this theory is the same or not by the way, so sorry if named it wrong!)
Lets explain this theory first:
Two criminals have been arrested by the police. If one confesses to a crime and the other does not, the one who does not confess will be sentenced to 10 years in prison and the confessor will be released. If they both confess, they will each face six years in prison, and if they both do not confess, they will face only one year in prison. Therefore, the rational choice is denying the crime by both of them!
Zeus has developed the game into three modes: Stake, Bond and Sell, explaining that highest possible profits happends when all users stake $OHM, and if everyone wants to sell their tokens, it will be the worst possible case!
In the Olympus DAO community, the below decision matrix is known as meme 3,3
Another way to make a profit on this project is bonding. How bonds work in simple language is: Give me the money today; I will return it with a profit after a certain period of time!
By depositing the cryptocurrency in the treasury, users can receive a discounted amount of $OHM for a few days. If the $OHM price stays the same or rises, a huge profit can be made after repaying the loan and selling the OHM. Olympus also automatically transfers part of its treasury assets to protocols such as Aave and makes a profit.
It is even possible to deposit LP tokens and receive additional discounts. The purpose of providing liquidity is to receive a part of the fee for the transactions made in the pool. Of course, people only receive rewards for trades done for their pair. Olympus also encourages people to deposit LP tokens for OHM-coupled pools.
Olympus's goal is to have its own liquidity. Simply, OlympusDAO can receive all trade commissions on all pairs of OHM trades in decentralized exchanges. As a result, Olympus can generate capital for itself.
In the last part of this article, lest talk about Olympus Pro!
OlympusDAO decided to increase the scale of the bonding feature and in September 2021 introduced the Olympus Pro platform.
Olympus Pro is a platform that allows other Defi projects to have their own liquidity. So far, various Defi protocols from Ethereum, Avalanche, Fantom and Arbitrum have joined Olympus Pro.
Borrowing on Olympus Pro is like borrowing on Olympus Dao. The difference is that instead of OHM, you are given the corresponding protocol token. After repaying the loan, 3.3% of profits goes to Olympus Dao.
Well that's it! Hope you like my research about one of the biggest projects in the Defi history, here I'm sharing 2 recourses that I used for this article and Both are in Persian language for helping me to understand OlypusDoa better and faster :)
https://virgool.io/AbanVenture/%D9%85%D9%88%D8%B1%D8%AF-%D8%B9%D8%AC%DB%8C%D8%A8-olympus-dao-nno1ug27gpei https://wallebi.blog/fa/what-is-olympus-dao/
