For the past year, a token has been out to steal Bitcoin’s thunder, Percy Jackson style. Olympus – or $OHM, which celebrated its one year anniversary yesterday – is a token with its own hero cult, a large sect of degens self-identifying as ‘Ohmies’, signified by an ominous ‘(3,3)’ in their Twitter bios. (A reference to the win-win option in game theory and the idea that not everything in life is a zero sum game. Or so El Prof told me, just in time to shoot down my own conspiracy theory, which may be too contrived to describe even here, so. Probably for the best.)
Despite not being listed on any major crypto exchange, the Olympus coin currently sits at $2B in market cap, making it a top 5 DeFi protocol in terms of value. With an immense APY and 25x growth over the past six months, it has all the markings of a premiere Scorcese-biopic-worthy Ponzi. But at least one former heretic has been converted. Nat Eliason, a prominent web3 intellectual, just dropped a piece in Almanack arguing Olympus could ‘replace Bitcoin’. As far as Big Bads go, it sure beats Kronos.
According to Eliason, Olympus’ immortality stems from its liquidity. In essence, there are two factors influencing a token’s value – its price and its liquidity. Price is determined by demand, the ‘imaginary number going up and up’ we described previously in our post money theory. Liquidity is determined by supply, the actual amount of tangible fiat tied to your tokens. New tokens often have a higher price than their liquidity, leading to Atlas-ish instability – all it takes is a whale to drop out or a few adopters to shrug and both liquidity and price might plummet.
Olympus avoids this by selling both tokens and bonds. You can read the specifics in migraine-inducing depth here, but the gist is, you can put a certain amount of money into the $OHM liquidity pool, then sell your liquidity position back to the OlympusDAO for a bond, worth marginally more in $OHM than it would be if you’d exchanged the fiat for the token directly. So, basically, they’ll pay you to supply them with liquidity, resulting in free tokens for adopters, as well as a far more stable project, of which 99% of the liquidity ($300M) is controlled by the founders.
They’ve also done some fancy, not-quite-felonious accounting footwork with their staking model – allowing them to showcase an insane, >7,000% APY – because more tokens are minted every time someone buys a bond. So, while your token balance might increase by 70 fold over a year, your share of the market cap would stay constant. This creates incentive to stake $OHM rather than sell it, or, should you sell, funnel the gains back into liquidity bonds for more. And, perhaps most notably, they’re now piloting a program called Olympus Pro, allowing any ICO the possibility to piggyback off the bonds model and offer it for their own native token.
That’s a lot of acidic, above-the-shoulders mustard shit, so if I lost you somewhere around ‘Percy Jackson’, I’d suggest checking out Eliason’s article in full, or at least stepping away for a hot sec, following McConaughey’s two keys to success, and returning refreshed for the conclusion. Which is: the ideal, slightly suss DeFi use case is not some generic brand Madoff rip-off tied to clever, culturally-relevant branding. (Like, show some creativity, at least.) When, once in a lifetime, the technology, economy, and consumer interest alchemically align, the true higher order thinkers come together to build a better future, not cheaply rehash the past.
The inverse of the gamified scams we discussed last week, the Ohmies have gamified legitimate financial maneuvering, making it stable, fun, and, most importantly, not a zero sum game. Of course, it could just be a black label, paradigm-shifting Ponzi, a galaxy brain rug just waiting to be pulled. In which case, I’d celebrate it, too, for the critical thought behind it alone. But it seems unlikely. With its current liquidity, the $OHM floor would rest around $30, even if every single hodler pulled out. It’s a long fall from its $800+ price today. It’s also a far cry from magical Internet money with literally no inherent value outside of consumer demand.
Olympus moves with the flame of Western Civilization. Currently, it resides across a bunch of decentralizing servers in cyberspace. So it’s only natural the pantheon would take on Bitcoin next. Gods damn. Fifth grade me just pulled up a blank Open Office document to write a real slapper of a slash fic.