Olympus DAO Decentralized Reserve Currency Protocol

In this article, we will try to understand what Olympus DAO is, and also tell you what this innovative protocol does, what is the mission of its team, and how to participate in it.

In short, Olympus DAO is a decentralized reserve currency protocol that offers compound interest through its own treasury. The DAO stands for a decentralized autonomous organization, and the most tempting thing here is that everything is decided by its community.

In general, Olympus DAO wants to become a financial backup system for Web 3.0. So, let's see how his team plans to implement this.

Olympus DAO — Founders
OHM — Not a stablecoin
More about OHM
Olympus DAO Reserve Currency
Key innovations of Olympus DAO
The Pillars of Olympus
Market participation
Using game theory
Liquidity belonging to the protocol
Liquidity guarantees
Olympus DAO Participation
Results

Olympus DAO — Founders
It's no secret that the global financial system is already broken. The financial crisis of 2008 prompted Satoshi Nakamoto to create Bitcoin. The invention of cryptocurrency should encourage international finance to change.

olympus dao

Both authoritarian and democratic governments have a stranglehold on centralized banks. Moreover, they help to conduct far from transparent fiscal policy and regulation. Unsurprisingly, their treatment of the financial system had a negative impact on ordinary people around the world.

That's why the founder under the pseudonym "Zeus" had the idea to found Olympus DAO. Zeus, together with an anonymous team, strive for a decentralized economy belonging only to the community. This is the best way to ensure transparency, stability and financial accessibility.

Olympus is a mythological heaven ruled by deities. Olympus DAO wants every Internet user to have the opportunity to own a decentralized reserve currency, completely independent of government policy.

Now that you know more about the team and the reason for creating the protocol, let's delve into Olympus DAO in more detail.

OHM is not a stablecoin
Stablecoins are an integral part of cryptocurrency. Users can feel comfortable making transactions with stablecoins, because their value will remain unchanged, unless an Apocalypse occurs in the crypto world.

olympus dao

However, if the stablecoin is pegged to the US dollar, it will move along with the dollar, both in a positive and negative direction. In other words, despite the fact that it is stable, when the dollar depreciates, the same thing will happen with the stablecoin tied to it.

The native Olympus token is OHM. But OHM is not a stable coin. The team designed it to become an algorithmic reserve currency with decentralized assets supporting it.

Learn more about OHM
The goal of Olympus DAO is to create a currency system in which the DAO strongly controls the behavior of the OHM token. The concept is similar to the gold standard. The OHM token provides a free-floating value on which its users depend, and at the same time, OHM draws its value from treasury reserves.

Therefore, OHM is a "secured", and not a "linked", cryptocurrency. It is not pegged to the US dollar, and is supported by a basket of assets. In addition, by focusing on supply rather than price, Olympus DAO believes that OHM will be able to maintain its value even in the face of market volatility.

It works like this: the Olympus DAO Treasury supports each OHM with at least one DAI. When the OHM trades below one DAI, the Treasury repurchases and burns the OHM until the price returns to one DAI. However, there is no upper limit, so the OHM can trade above one DAI.

Olympus DAO Reserve Currency
OHM is a native currency, and a basket of assets supports it in the Olympus treasury. This protected treasury contains an internal value line, below which the token cannot fall in any way.

The protocol requires OHM to be a decentralized reserve currency. In addition, market participants want the reserve currency to be a stable form of value. For example, the stability of the US dollar depends on the direction of the Federal Reserve System (FRS). On the other hand, autonomous market forces determine the stability of OHM. More importantly, tokens backed by a basket of decentralized assets will help maintain this stability.

The reserve currency should be sold with minimal price slippage and sufficient liquidity to conduct mega-transactions. The goal of the project is to establish OHM as a reserve currency accepted in all existing and future chains, and to denominate all trading pairs.

Key innovations of Olympus DAO
The team has implemented two innovations from the very beginning:

pOHM
In order to prioritize long-term growth, the team receives incentive rewards in pOHM. Olympus DAO cannot carry out private sales of OHMS, and they have to take an additional $1 from each OHM sold to keep the token.

Thus, by selling pOHM, the holder has the opportunity to mint OHM by burning pOHM. For example, a trader can provide one DAI and one pOHM to mint one OHM. pOHM price = OHM price minus internal cost. Therefore, it makes sense for a trader to redeem pOHM only when OHM exceeds its intrinsic value.

Decentralization
The most important element of Olympus DAO is the community itself, and it is the participants who exercise decentralized power. The transition to decentralization began with the DAO managing the Olympus protocol. Consequently, the organizational structure of Olympus DAO is not strictly hierarchical.

The Pillars of Olympus
Olympus bases its success on three pillars: Reserve, Liquidity and Utility. More importantly, each component supports the protocol by a dedicated team implementing numerous initiatives.

The Pillars of Olympus DAO:

Backup
This component sets the purchasing power. Therefore, projects related to the reserve component will focus on maintaining the purchasing power of the OHM.

Liquidity
To promote universal acceptance in DeFi, the liquidity component will rely on OHM's liquidity enhancement campaigns.

Utility
This component encourages usability. Utility refers to the financing of everyday tasks, which will contribute to the adoption of OHM in the Web 3.0 ecosystem.

These elements will help make OHM a reserve currency that users can easily exchange for other goods and services.

Market participation
By participating in Olympus DAO, users can participate in staking and linking. Stakers can bet OHM, and get more tokens. Similarly, those interested in linking can exchange LP tokens for OHM at a discount after a fixed entitlement period.

olympus dao market participation

Using game theory
To explain Olympus DAO, it is necessary to understand some principles of game theory. The easiest way to visualize a game theory model is to understand three possible actions that players should take:

Steaking
A player is likely to place a bet if he anticipates an increase in the price or offer. Bids will push prices up. By encouraging users to place bets in OHM, the token supply remains out of the market. When the protocol mints new OHM tokens, and most of them are distributed among the stake holders.

Sale
On the other hand, a player is likely to sell an asset if he predicts a reduction in price or supply. Selling has the opposite effect to staking, or rather pushes the price down.

Bonds
Most likely, more players will contact if they do not see the likelihood of significant downward price or supply movements. Bonds benefit from price constancy. They invest capital upfront to get a fixed profit on a set date in the future. The bondholder's profit will depend on the OHM price at the time of bond repayment. Thus, a bond is a process that increases treasury reserves.

The strategies of the game are cooperative. In other words, they create a positive-sum environment in which any games, such as betting/selling and bond/selling, lead to neutral results. The only effect with a negative amount is a sell/sell scenario to discourage players.

Liquidity belonging to the protocol
Olympus DAO uses so-called "protocol-owned liquidity" (POL). It has a protocol-driven treasury and, as mentioned, a bond mechanism and a staking fee to control supply expansion.

The sale of bonds brings Olympus DAO profit, and the treasury uses this profit to mint OHM, then distribute them among the stake holders. As for the protocol itself, here staking and binding are profitable, but not selling. At the same time, staking and selling cause price movement, but binding does not.

In addition, only the protocol can mint or burn OHM. This requirement ensures that one DAI supports one OHM. Thus, the protocol will constantly buy OHM when it drops below one. Olympus DAO's motto is: "You can't trust the Fed, but you can trust the code."

Liquidity guarantees
To get a further explanation of Olympus DAO, we have to take a look at its liquidity guarantees. Thanks to the bond mechanism, Olympus DAO owns most of its liquidity. This feature means that the protocol does not need to stimulate liquidity by paying high rewards to farmers.

Olympus DAO guarantees sufficient liquidity for any purchase and sale transaction. Since it is the most extensive liquidity provider, it withholds most of the liquidity provider's fees as additional income for its treasury. Thus, POL can support the OHM token.

In traditional banking, the partial reserve system works because depositors are in no hurry to withdraw their funds. Banking customers' faith in the system is based on the FDIC's trust in its rules. The OHM token is not insured by the FDIC, but its incentive structure also protects participants.

Olympus DAO Participation
Olympus DAO is managed by a community whose members preside over the forum, and token holders have the right to vote. DAO members use management tokens to vote on important protocol topics such as treasury functions and partnerships. In addition, the protocol is always looking for new participants. So, to participate, users can join the Olympus forum or the Discord channel.

Results
Olympus DAO has successfully launched in achieving its ambitious goals regarding the reserve currency. Thanks to the growing community, in the first year of working in the DeFi space, they attracted more than 85,000 users, and the number of developers grew from zero to 60, while more than 150 people created its protocol and established 50 partnerships.

OlyZaps is the latest addition to the protocol that allows users to exchange cryptocurrencies for sOHM or bonds, with a simple operation.

Olympus DAO boasts an active community supporting close economic cooperation in Web 3.0. In addition, it is looking for like-minded people who want to join its global network.