ℹ️ This is a long article covering $OHM. Feel free to skip to the sections you find most interesting, but please read before asking questions. I will keep it updated as new information comes through, so you might want to bookmark the web version.
What is Olympus ($OHM)?
First, I invite you to read all of the following articles. They all explain what OHM is from different perspectives.
You might be inclined to skip the reading. Don’t. Always remember:
Never invest into something you don’t understand.
This is because when things go wrong (as it tends to happen in crypto), you won’t have the necessary knowledge and/or conviction to stick it out or cut your losses, which will lead to regret / poor decision making.
In-depth articles:
WTF is Olympus DAO?? @ Bankless | archive, archive
The Holy Trinity for Adoption @ Bankless | archive, archive
Experiments in Money and Value @ Glassnode | archive, archive
Can USD-independent stable assets survive – and thrive? @ Dose of DeFi | archive, archive
Quick videos (don’t watch only the videos, read the articles above)
🐥 Twitter Olympus 101 thread (archive):
Olympus parallels hybrid exchange rate policies - 🐥 twitter thread (archive):
Key takeaway
The key takeaway for the reader is that OHM is not required to be stable in US dollar terms. Other assets should be stable in OHM terms. Avoiding a reference to any external unit of account is a way to escape dollar absolutism and advance the independence of decentralized finance.
OHM (seems to be) uncorrelated from the general crypto market
Since its inception, OHM seems to be uncorrelated from the crypto market. I’m not the only one that noticed (archive). Mind this article is from July:
Since July, we’ve had yet another market crash 📉 of around -25% across the board:
How did OHM fare? I’d say pretty well, adding +200MM to its market cap.
The trend seems to be:
If the general market is crabbing 🦀 or going down 📉 -> OHM either stays stable or goes up
If the general market goes up 📈 -> OHM either stays stable or experiences a sell-off (which you usually can make up for with the 4-5 digits APYs)
🆕 2021-09-14, here’s a thread (archive) just posted analysing correlation of OHM with ETH/BTC:
Will this continue to be? I don’t know. We’re still very early to be able to say with any certainty, but if it holds true, OHM should be in every portfolio as a risk-off asset to counterbalance the general market.
$OHM price cycle
See full thread here (archive):
The OHM feedback loops
This thread is a great way to see what drives price appreciation / depreciation and APY (archive).
Price expectations for OHM
Will the price go astronomical? It could, but when talking about $OHM, one should not look at price but at market cap (archive), like all rebase tokens.
Not only is OHM a rebase token, but over the long term its unit value should converge to RFV + some premium. Remember that RFV = Risk Free Value, which is the value of the stable assets in the treasury. Currently, each OHM is backed by ~ 30$ in treasury value.
The premium is the additional price the market would pay above each OHM’s intrinsic value to be able to, for example, gain access to interest payments. At the moment, this interest comes in the form of “inflation”, which gets distributed 90% to the stakers and 10% to the treasury. This is what gives those impressive 4-5 digits APYs and why current price is at a 15x premium.
But in the long term, one should expect APY % to go down as supply goes UP (see below for more details).
So if not for the 4-5 digits APY %, what will sustain the premium above RFV? Well, it’s hard to see how a 15x premium would be sustained in the long run. So I’d say we should be much more conservative and expect a 2-3x premium over RFV. As the protocol matures, RFV should go up as more revenue streams make the treasury increase.
Ok, so what will sustain that level of premium? The assets in the treasury will be generating interest which can and probably will be distributed to $OHM token holders. How much interest there will be will depend on how big of a treasury OHM can collect, but it’s not hard to imagine a 1B $ treasury in the near future.
Another way to value $OHM is to compare it to the market value (MV) of its treasury assets. This is different from RFV, as RFV tracks only stable assets, while MV tracks the total value of Olympus’ treasury assets, including non-stable assets such as ETH, xSUSHI tokens, LP tokens, etc. When taking these under account, OHM would be priced at 80$/OHM + premium based on today’s numbers.
Takeaway - Long term the price per OHM should equal either RFV (for a conservative view) or MV (for a more realistic view). Both of these can and, in my view, will increase. Even though the “price” itself might go down, the supply of OHM will be much greater the more time passes. So even if the price does reach 30$, it’s highly likely that supply will be in the 100s of millions or a few billion, making up for any price disparity.
Breaking it down
What’s the play? Buy $OHM through 1inch / Sushiswap, preferably with $DAI so you avoid paying more in gas fees than necessary. Then go and stake it on the official website. Go here for a video guide.
Have the contracts been audited? Yes, see here (archive), but audits are not a guarantee (archive).
How much time do I have? This particular opportunity is a bit time sensitive, simply because of compound interest. Current APY (2021/09) is ~ 8000%. The sooner you stake, the faster you’ll be able to make up your initial investment and become “risk free”.
As the project matures, the APY % will come down. As such, high rates will not be lasting forever. In fact, you can check out for yourself:
We’re currently at ~ 1.7MM total supply, so we’re in the 1MM - 10MM supply range.
Here’s how to calculate APY:
Should I just ape 🦍?. In general, I do not advocate for jumping in without doing your research. With this project though, I do recommend to do your research over 1 week maximum, as time is literally money. The sooner you see the opportunity, the better.
What’s the rush? Like most opportunities, the higher the novelty in the primitive involved, the higher the risk and the higher the chance of making money. OHM is currently in the “expansion” phase, with high APY and high chance of making profit. Yet, this will not last forever. My guess is the profitability of this project will diminish drastically by Q2 2022 at the latest. This means that it matters to strike the iron while it’s hot. It’s the difference between buying bitcoin at 10$ vs buying it when it’s “mature” at 50,000$. Upside is still there, but far, far less.
Is the reward rate dynamic, as per OIP-18? No. The reward rate does not change dynamically, it needs to be put up to a vote. The point of OIP-18 is to set some expectations on what the APY could be given given a certain supply.
What’s an OIP? Olympus Improvement Proposal, it’s a way for anyone to propose changes to the protocol (which later on will be voted with your OHM balance)
Where can I see past OIPs? The forum has all of them, and here you can find a twitter thread that summarizes all OIPs as they come (archive):
So considering current supply inflation, when will the reward rate (and, by consequence, APY) be reduced? Hard to say, but I’d expect to see a vote to reduce it by end of the year or Q1 2022.
I heard APY was in the 5 digits. Why is it 4 digits now? OIP-18, beyond setting a general framework on how the reward rate will be managed, also set a new reward rate over a period of 2 weeks to 0.2975%, from an at-the-time 0.35%. What effect did this have from an APY perspective? Look for yourself:
Takes 9 more days to 2x your stack. Not too bad. The reasoning behind the reduction can be found on the forum post I linked, but the tl;dr version is: to make sure the protocol is sustainable for a long period of time. It’s a marathon, not a sprint.
How long will it take, at current APY, to double my position? As of right now, it would take approximately 60 days. This means in 60 days you’ll have 2x your original quantity of OHM.
Are there any places where I can simulate some scenarios? Yes, the community has created various Google Sheets for this purpose:
All in one calculator (staking, bonding, leveraging) <— you should pick this one
Should I be bonding? That depends.
Do you have a considerable stash of money to trade, so that you don’t get eaten by gas fees (talking minimum 10k+ $)?
Do you have hours to spend on timing bond buys / sells?
Do you understand the underlying mechanics of the variables that make bonds profitable or not?
I do not personally delve into bonding and you shouldn’t either. Here’s a primer on bonding (archive):
And another one, that also goes more into detail on the common pitfalls (archive):
What does (4, 4) mean? It refers to a strategy that employs both staking and bonding, to (hopefully) earn more than the APY of simple staking.
⚠️ Warning - while it is more profitable, it depends on position size, right timing, gas fees and how many hours you can dedicate to it. Most folks should just stay staked.
Here’s a thread that goes into how this strategy works (archive):
What does (9, 9) mean? This is the strategy where you leverage your staked OHM - sOHM - to earn more OHM in the same amount of time.
It’s called (9, 9) because it turbo-charges “normal” staking AKA (3, 3). See the section below on how to use this strategy.
What’s the best way to track Olympus metrics? The community once again created a few Dune dashboards to help out:
Official dashboard made by Olympus staff - allows to see % of people staked, market cap, what’s backing each $OHM, etc.
Olympus wallet history - this one allows you to put in your own ETH address that holds your OHM and tells how how long till you go “risk free” and how did you perform compared to BTC/ETH.
Policy dashboard - Allows to see all the parameters that govern things like reward rate, bonds, etc.
OHM Minting and Runway Metrics - a dashboard that compares minted OHM with RFV growth, supply increase per rebase, how much revenue we got per OHM minted, etc.
OHM wallet distribution - shows how OHM is distributed on a bell curve
OHM emissions prediction, introduced here, shows what the OHM supply could be in the future based on past emissions
On using leverage (9, 9)
⚠️ Warning - using leverage is risky, as it could lead to a total loss of capital. That said, this is the strategy I personally use, with a liquidation of < 70$
To leverage, you have two options.
This is the platform I’m currently using.
Pros:
Low & fixed interest rates for borrowing - some would say too low
Allows automatic single-transaction leverage (up to 10x)
Uses Sushi’s Kashi Lending (archive) underneath, inheriting all of its benefits (code has been audited, isolated market pairs unlike AAVE/Compound). Abra is the only platform currently licenced to use Kashi’s code.
Cons:
Due to very high demand, it often has little funds left to be borrowed, so you need to constantly check when new $MIMs (the platform’s stablecoin) are available for the OHM pool. There’s ~ 50MM worth of OHM deposited on the platform
Uses a new wrapped token (wsOHM or wrapped sOHM). This is because Kashi does not support rebasing tokens. This contract has not been audited yet, although there is a proposal (archive) for doing so.
Some believe it’s only a matter of time before the entire system implodes (archive). I agree. Current incentive structure is not sustainable and dependant on the pricing of $SPELL (Abra’s governance token). Due to this, one should be vigilant to the liquidity in the $MIM Curve pool and the value of $SPELL, as both of these will determine how close the system is to the edge.
Initial costs are high, due to having to approve lots of contracts (expect 300-400$ depending on gas costs).
Here’s an article explaining how to work the platform (archive | archive) and another article (archive | archive), from the same author, discussing the results after 12 days of leverage.
👻 Spoiler alert: +81%📈 in returns compared to not using leverage
The second option is Rari.capital. Here’s a video going through how to work the strategy with this platform:
Pros:
Funny enough, Rari fixes the problems that Abra might have in the future, making it more sustainable.
Has been audited.
Each pool in their Fuse protocol is independent of each-other, so an infinite-mint exploit for one coin will affect only the pools where that coin is present.
Cons:
Generally high interest rates (due to high utilization of pools) and highly variable interest rates.
I repeat, interest for borrowing could be anywhere between 40 to 100%
Buggy / inconsistent user interface
Takes ages to get an answer in discord, but could be timezone-dependent
No single-transaction leverage - this means you need to 1) stake OHM 2) borrow a stablecoin 3) buy OHM via 1inch / Sushiswap 4) Stake OHM on the official website 5) stake your sOHM on Rari again to lower your liquidation price. As you can tell, all these steps require gas and time.
Rari has two separate pools which you can use with sOHM:
Tetranode’s Locker - 101+ MM locked, 76% LTV
Olympus Pool Party - 54+ MM locked, 33% LTV
The main difference is the LTV value and the “riskiness” of the pooled assets.
Rari uses a lettered security score (where A is best, Z is worse). The two pools have different security scores as they include different assets in the pool.
Go here (archive) for more information on Fuse and check out this page (archive) on what the pool risk score means.
What should my liquidation price be? At a minimum (to be safe), it should equal the lowest price point $OHM has ever faced (currently ~ 162$). To be extra-safe, it should be ~ 100$.
Which platform should I use? Abra is simpler to use and cheaper, so that’s what I personally use. ⚠️ Beware of the risks I outline above though.
If I do use Abra, how do I calculate how much OHM did I gain? As a reminder, on Abra your sOHM will be wrapped into wsOHM. Your wsOHM will not increase in quantity. It will remain fixed. To calculate the number of OHM you now have, simply multiply your wsOHM quantity with the OHM Index value:
🗒 Note: You need to be signed-in to Dune Dashboards to be able to click the Run button.
To calculate your earnings, simply subtract the value of the product from the amount of OHM you had when you first staked on the platform.
Olympus Pro and what it means to own your liquidity
At this time, nobody knows for sure what exactly is Olympus Pro. It’s a new value-add to the Olympus system that will be revealed towards the end of September 2021. But, here’s a tweet thread that I believe nailed it (archive):
Essentially, Olympus demonstrated how a protocol could own its liquidity. Owning your own liquidity is a great advantage, as the market will be confident that in downturns big LPs will not be rugging. Not only that, but the protocol earns all those juicy trading fees for its treasury. Here’s a thread (archive):
With the Alchemix partnership, Olympus will help managing their bonds and helping the ALCX community own their liquidity and stop the extreme downwards pressure the price of $ALCX faces due to their current high liquidity incentives.
Olympus gets a 3.3% fee for its treasury (in $ALCX tokens) and the Alchemix community can take a breather. Win-win for everyone involved. I won’t be surprised if this is just one of many projects to come.
Here’s a thread on what’s the difference between Liquidity Mining (AKA the way 99% of projects start their liquidity journey) and Liquidity Bonds (AKA the Olympus Way) (archive):
And here’s a thread (archive) on why liquidity matters:
Projects planning to use Olympus-as-a-service (Olympus Pro)
Alchemix ($ALCX), with a 3,3 % fee going to Olympus
StakeDAO ($SDT), with a 3,3 % fee going to Olympus
Pendle (speculation ⚠️ )
Frax ($FXS), with a 3,3 $% fee going to Olympus
Projects collaborating with Olympus, making OHM treasury grow
Wonderland.money ($TIME), with 33% of treasury revenue going to Olympus
Klima DAO ($KLIMA), where Olympus got pKLIMA tokens, similar to OHM’s own pOHM tokens (archive).
Risks & Common Concerns
ℹ️ I put this section last because I hope you’ll first read all the above before delving into risks, so you can make an informed decision.
I’m not going to go through inherent crypto risk (hacks, scams, etc). I am talking about protocol design risk.
Here’s a thread (archive) exploring a bank run scenario - tl;dr: you’re gonna be fine.
If everyone sells, price goes down. Duh? That’s valid for every asset. Not every asset is backed by an ETF-like treasury and owns its own liquidity though.
What if treasury assets devalue? That is indeed a risk, one that the community is working on addressing. Initially the treasury was majority $DAI and $FRAX, but now it includes $ETH, $xSUSHI, $LUSD (as soon as OIP-24 passes) and $ALCX (as soon as the Alchemix community approves it). Bar catastrophic devaluation of $DAI, this shouldn’t be a concern, though it’s something to keep in mind.
The high APY smells of ponzi. My mom taught me that there’s no free lunch. I completely understand how it might seem that way to an external party and I don’t blame you, but please take the time to read the articles and threads mentioned in this piece before reaching a conclusion. Olympus is like a (liquid!) startup with documented cashflows and partnerships, with more revenue streams coming in soon (see Olympus Pro). Check out this twitter thread (archive) for more:
🆕 2021-09-16, a great thread (archive) answering to the most common concerns for new people looking into OHM.
Changelog
2021-09-14 Added a new twitter thread analysing correlation between OHM and BTC/ETH. Also added “Projects planning to use Olympus-as-a-service (Olympus Pro)” section.
2021-09-16 Added a new twitter thread answering common FUD about OHM.