Olympus (OHM) and its various forks

[brianwalden]

Olympus DAO on Ethereum has been one of the hot new things in DeFi this year. I'm just barely starting to wrap my head around it, but I'm going to try to explain it. Please correct me if I get things wrong.

From what I understand Olympus didn't like how stablecoins are pegged to inflationary fiat currencies whose price is controlled by governments. So they designed OHM to be backed by 1 DAI each to give it a floor price of one dollar. But there's nothing keeping the price from rising higher. Whenever the price of OHM is above $1, they create more OHM and distribute it to all the stakers to try to increase the supply and slowly get the price back down. But this promise of earning more coins creates demand as well. I think the devs thought there would be a point where the two would balance out and cause relatively stable price at maybe $5 or $50 ish - something reasonable. But what's actually happened is the apes and degens have driven the price up to $900 all while Olympus is paying out 8000% APY (that's not a typo).

The way Olympus creates new OHM is by selling bonds that mature over 5 days which allow the bond holders to get OHM at a discount. They sell the bonds for liquidity pool tokens and other yield bearing assets. So the Olympus treasury is full of tokens that earn even more yield, growing the treasury over time. This is what allows them to create more OHM over time to pay out all that inflation.

This solves one of the common problems with typical AMM liquidity pools. Whales get in early while the rates are high, then as more people get in and the rates drop, the whales pull out and move onto other pastures. With Olympus, the treasury buys up and owns all the liquidity. They're not going to pull it out, it's like a liquidity black hole that pumps OHM out the other side.

They seem to have stumbled upon a real-life money printer. Is it just a ponzi scheme that's going to come crashing down? Maybe. I would consider this a very risky investment. There are several forks out there (everything good gets copied). Yesterday I started using Wonderland (TIME) a fork on Avalanche - I try to avoid Ethereum fees whenever I can. It's too early to tell if it really delivers seemingly impossible returns, but I'll report how it goes.

If you've got any knowledge or experience with this stuff, please share.

Edited November 10, 2021 by brianwalden

[djdhrubs]

Bought OHM months ago, never really understood it til now lol. Thanks for that. My approach has always been the same. I stake it, and every few weeks, I cream off one quarter of it and sell it into ETH. Been working nicely as a result. I honestly can't remember what price I bought it for, it was many months ago, as in, early 2021.

[CryptoOwl]

https://docs.google.com/spreadsheets/d/1fTod1rMyWQpxIiKKqeWT4RRy3kex2-g_3yF7_E4bd54/edit#gid=943577762

Handy calculator 👆

This thing just sounds crazy, even if TIME would drop -99% you would still make money when staking for a year 👀

[CryptoOwl]

Question 🙋 Staking TIME earns MEMO, what's the price of MEMO tied to? 🤔 

[brianwalden]

5 minutes ago, CryptoOwl said:

https://docs.google.com/spreadsheets/d/1fTod1rMyWQpxIiKKqeWT4RRy3kex2-g_3yF7_E4bd54/edit#gid=943577762

Handy calculator 👆

This thing just sounds crazy, even if TIME would drop -99% you would still make money when staking for a year 👀

Yeah. There's either some fatal flaw that no one has discovered yet and we're all gonna get rekt, or they really figured out how to make a perpetual money printer.

[brianwalden]

1 minute ago, CryptoOwl said:

Question 🙋 Staking TIME earns MEMO, what's the price of MEMO tied to? 🤔 

MEMO just represents staked TIME. The analogy they're using is that it's like a memory of how much TIME you can unstake from the pool. It's like your coat check ticket. So don't lose them, you need them to unstake your TIME.

[CryptoOwl]

5 minutes ago, brianwalden said:

Yeah. There's either some fatal flaw that no one has discovered yet and we're all gonna get rekt, or they really figured out how to make a perpetual money printer.

Money is a scam anyways 🤷‍♂️ 

So, MEMO when unstaked gets converted to TIME. Ok.

TIME gets minted when assets are locked to treasury. Ok.

Now, we either need TIME value to rise against other tokens it trades against and/or we need more TIME to pay staking rewards. Isn't that the X on this formula? 🤔 

[brianwalden]

23 minutes ago, djdhrubs said:

Bought OHM months ago, never really understood it til now lol. Thanks for that. My approach has always been the same. I stake it, and every few weeks, I cream off one quarter of it and sell it into ETH. Been working nicely as a result. I honestly can't remember what price I bought it for, it was many months ago, as in, early 2021.

I get the feeling this is what people do. No one really knows what's going to happen to these things long term, so they take profits every month or two rather than waiting to see if they can really go exponential.

[CryptoOwl]

2 minutes ago, brianwalden said:

I get the feeling this is what people do. No one really knows what's going to happen to these things long term, so they take profits every month or two rather than waiting to see if they can really go exponential.

That said, does anybody know how these work at all? 🤔 😂 

[brianwalden]

1 minute ago, CryptoOwl said:

Money is a scam anyways 🤷‍♂️ 

So, MEMO when unstaked gets converted to TIME. Ok.

TIME gets minted when assets are locked to treasury. Ok.

Now, we either need TIME value to rise against other tokens it trades against and/or we need more TIME to pay staking rewards. Isn't that the X on this formula? 🤔 

Each TIME is only backed by one MIM (dollar stablecoin). So let's say I buy a bond using TIME-MIM LP tokens. Let's use round numbers and say 1 TIME is $10K. I put up 1 TIME's worth of TIME-MIM LP tokens to buy this bond which gets me say 1.1 TIME after 5 days when it matures. That means I've given the Treasury 5000 MIM (half of the LP token) which can used to mint 5000 more TIME to pay out as inflation to stakers. I'll admit. I don't quite fully understand it, but I think that's got something to do with how it works.

Remember, the system is actually trying to drive the price down closer to $1. But apes like us are just too stupid and we keep buying more of it the more they print.

[brianwalden]

7 minutes ago, CryptoOwl said:

That said, does anybody know how these work at all? 🤔 😂 

I'm pretty sure the - what would you call it? - emergent properties of Olympus took even the developers by surprise. While I'm sure they understand what's going on from a technical perspective, we're in the equivalent of price discovery here, no one's quite sure how far this can go.

I would take profits while we're still in the bull market because I don't think anyone knows what will happen if people lose confidence in these things and start unstaking and selling.

[CryptoOwl]

Runway 411.8 Days

Backing per $TIME $1,310

https://app.wonderland.money/#/dashboard

Um, if I'm not misunderstanding something. Runway would imply that there are x amount of TIME tokens minted to be distributed as rewards? 

Also, TIME is backed by the treasury, share of that pool essentially. Yet, it trades at extreme premium atm as people are aping in... 🙄 

Is there a way to avoid this premium by minting? 🤔 

[brianwalden]

42 minutes ago, CryptoOwl said:

Runway 411.8 Days

Backing per $TIME $1,310

https://app.wonderland.money/#/dashboard

Um, if I'm not misunderstanding something. Runway would imply that there are x amount of TIME tokens minted to be distributed as rewards? 

Also, TIME is backed by the treasury, share of that pool essentially. Yet, it trades at extreme premium atm as people are aping in... 🙄 

Is there a way to avoid this premium by minting? 🤔 

I believe the runway is how many days or can keep paying out the current rates assuming nothing else changes. I think over a year is good.

I don't think minting avoids the premium. You're basically being compensated a small percent (less than 10%) for buying directly from the treasury with a 5 day maturity period before you get your TIME (technically I think it releases in stages over the 5 days).

These coins aren't supposed to be fully backed by design. In my head, the premium over the backing comes from how people value the expected returns from staking over time.

It's easier to find material explaining Olympus than Wonderland. You might want to go reading about that to learn more. After hearing about OHM for weeks I only just started really looking into this yesterday, so I don't have a great understanding of it.

[CryptoOwl]

1 hour ago, brianwalden said:

I believe the runway is how many days or can keep paying out the current rates assuming nothing else changes. I think over a year is good.

I don't think minting avoids the premium. You're basically being compensated a small percent (less than 10%) for buying directly from the treasury with a 5 day maturity period before you get your TIME (technically I think it releases in stages over the 5 days).

These coins aren't supposed to be fully backed by design. In my head, the premium over the backing comes from how people value the expected returns from staking over time.

It's easier to find material explaining Olympus than Wonderland. You might want to go reading about that to learn more. After hearing about OHM for weeks I only just started really looking into this yesterday, so I don't have a great understanding of it.

I think we are thinking and trying to reason too much 😂 After all this is crypto and magical internet money 🤑

Perhaps this is it!? 

[CryptoOwl]

 

Thats interesting, OlympusDAO team is looking for official fork into AVAX. Isn't that quite strange considering AVAX already has Wonderland that is sponsored by the same people behind MIM/Acrabadabra? Competition ahead?