Olympus Finance (OHM)

What is OHM

OHM is a cryptocurrency on the ETH blockchain. It provides users a backed currency with staking rewards and other protocols with their own liquidity. We will go more in-depth on this later.

Before you stop reading, I think you should know that staking rewards are roughly 7000% a year! (Compounded)

OHM is a confusing currency and has a lot of moving parts so don't be concerned if you don't understand it immediately. It took me almost 3 hours to understand it fully. I have linked my sources at the bottom of the article

Let’s dive into how the staking works.

I have provided a diagram below to help

It works like any other staking where you deposit your token. Once you deposit your token you will be given a Sohm( staked OHM). Staking rewards are distributed every 8 hours for a total of 3 per day. Staking rewards are called rebasing.

You can claim your rewards at any time as there is no lockup period.

Where do the rewards come from?

Staking rewards come from the minting of OHM. I have provided a diagram below which will show the staking rewards change as coin circulation rises.

Bonds

Bonds work by you depositing one of the available currencies or lp tokens to the treasury and in return you getting OHM but at a discounted price.

I have included a simple diagram below to illustrate the process

What is the treasury?

The treasury is all the assets that are backing OHM. The treasury receives assets in two ways. One by users buying bonds, and two by OHM’s b2b model which I will explain later in this article.

Currently, OHM has a price of $957usd with each coin backed by $24usd. Clearly, there is a big difference in the backing, which is why it is important to note that backing is not the same as pegged.

To calculate the backing per coin simply take the treasury amount and divide it by the circulating supply. This will give you the $ amount each OHM token is backed by. All this info can be found on Olympus Finances website.

The treasury mains goal is to automatically make sure that OHM price is always above the amount each OHM is backed against, in this case, $24.

The B2B Model

Olympus plus is a way for other protocols to own their liquidity. One of the interesting things about OHM is they own their liquidity, I will cover this more below. Since they own their liquidity, they decided to create a way that other protocols can also own their liquidity by using their service. This benefits other protocols as they don't have to create their own way to own all their liquidity, they can just use Olympus service. This benefits Olympus as 3.3% of all liquidity tokens deposited in Olympus pro are put in the Olympus treasury which gives each OHM more of a backing.

You will understand this more once I explain how Olympus owns its liquidity.

How does Olympus own its liquidity?

Olympus own their liquidity by selling lp token bonds. There are two types of bonds, liquidity ones, and regular asset ones. I will explain regular asset bonds later as they don't affect Olympus owning their liquidity.

The way liquidity bonds works are you deposit liquidity in sushi or uni swap liquidity pool. You then receive the lp tokens. With these lp tokens, you go to Olympus Finance> bonds and give them your lp tokens in exchange for OHM at a discounted price. You don't lose any money in the process as they give you an equal amount of OHM to the amount of money you deposited in the liquidity pool. You actually get little extra money as they give you the OHM at a discounted price. This is their way to incentive you to help them own their liquidity.

Olympus owning their liquidity is a great plus for all holders as it means there will always be a way to sell or buy the token. Currently, OHM owns 99.5 percent of the total liquidity.

The names of the 2 types of bonds are not legit terms, they are terms I made up so it is easier to understand the way it works. If you view the bond section on the Olympus website, you will fully understand what I mean.

How Olympus fills their treasury (aka the second type of bond)

Olympus fills the treasury by selling regular asset bonds and through their business 2 business model.

The second type of bonds is regular asset bonds. They work when you deposit a regular asset (dai, Frax Weth, etc) and get OHM at a discounted price. E.g normally it would cost 950 dai for 1 OHM but since you are buying a bond it will cost you 920 dai for 1 ohm.

They give you this discount because you are either filling their treasury by buying a regular bond or helping them own their liquidity by giving them your lp tokens.

(in case you are unaware, you cant remove your liquidity without your lp tokens. What happens is the contract ends up holding all these lp tokens which lets Olympus own their liquidity)

Why I like OHM and will be buying it

• They own their liquidity
• Brilliant idea and way of execution
• Super high staking APY
• I understand it fully
• I have a good gut feeling about it
• Has a cool name
• Great tokennomics

What you can do with Sohm (bonus and unrelated to Olympus Finance as a token)

Like I said above, once you stake OHM they give you an equal amount of Sohm. (stakedohm) With Sohm you can deposit it in Pool Togethers Sohm pool. By depositing your Sohm you have a chance to win their no-loss lottery. (Currently, the prize is $100,00usd).

I have linked a full article about pool together here

Conclusion

I hope this article helped you understand OHM, as you can tell it is a confusing asset, I have linked some helpful articles and videos below. These are some of the articles that helped me understand OHM.

Cheers!

this is not financial advice, it is meant for entertainment purposes only. Data and facts in the article are written to the best of my ability

Sources and helpful articles

The decentralized reserve currency. Olympus DAO. (n.d.). Retrieved October 10, 2021, from https://www.olympusdao.finance/.

What is Olympus? Olympus. (n.d.). Retrieved October 10, 2021, from https://docs.olympusdao.finance/main/.

A helpful video, along with some helpful links in its description. Credits: Passive Aggressive Income

Olympus DAO youtube channel, lots of helpful tutorials