[EXPLAINER] A Look at Olympus DAO – Crypto Decentralized Reserve Currency Creation – BitcoinKE

OlympusDAO is a Decentralized Autonomous Organization (DAO) that manages the Olympus Protocol, an algorithmic currency protocol with the goal of becoming a stable crypto-native currency.

DAOs distribute leadership of an organization to the community members who vote on key issues. Using governance tokens, they vote on issues such as allocations, partnerships, treasury functions, etc. Members of the OlympusDAO use a community forum and Discord to access the voting process, although the DAO is currently only implemented at a high level.

The DAO’s native token is called Olympus ($OHM) and serves as both a stable currency and governance token. Protocol native assets back every token in the Olympus treasury.

Although sometimes referred to as an algorithmic stablecoin, Olympus is more akin to a central bank as it holds other assets like $DAI in reserve to steer its price. The goal is to achieve price stability while maintaining a variable market-driven price.

Olympus mission

Olympus intends to install $OHM as crypto’s decentralized reserve currency.

OHM’s goal is to provide the growing Web3 financial ecosystem with a censorship-resistant currency that preserves purchasing power, has high liquidity, is trustworthy, and is widely used as a unit of account.

Olympus aims to break Web3’s reliance on centralized, censorable stablecoin assets by creating an unpegged reserve currency called $OHM, backed by a basket of assets. Olympus actively uses its treasury as a counterweight to the market and the growth of the economy.

A fully formed $OHM is expected to provide the following benefits, with the organization running several campaigns to improve OHM capacity:

• Maintaining purchasing power through long-term price stability
• Has high liquidity on decentralized and centralized exchanges
• Used as a unit of account (e.g. by pairing with many other assets in Web3)
• Used as trusted collateral (e.g. to collateralize other assets or to be deposited in the treasuries of logs)

https://pbs.twimg.com/media/Fe0Qcn0WYAIRCbI?format=jpg&name=medium

How it works

The protocol allows users to buy $OHM at a discount that locks them into the network and incentivizes them to grow native tokens by adding liquidity through staking or yield farming.

Bonding is considered an efficient way to maintain liquidity on decentralized exchanges. To incentivize Liquidity Providers (LPs) to hold their liquidity in staking pools, AMMs (Automated Market Makers) are currently offering very high rewards in their native tokens, eventually leading to a decline in native token supply.

However, since users at Olympus provide liquidity (other crypto assets) to the protocol in exchange for discounted $OHM, the protocol receives the liquidity and not the LPs. Olympus also uses compound interest to reward stakers, which is more profitable over time.

$OHM is secured, not paired. Each $OHM is backed by $1 worth of assets in the treasury that are not tied to it.

Since the Treasury backs each $OHM with at least $1, the protocol would buy back and burn $OHM if it trades below $1. This causes the $OHM price to rise back up to $1. On the other hand, $OHM could always trade above $1 since the protocol does not impose an upper limit. Think coupled == 1 while secured >= 1.

Diploma

The Olympus protocol is currently running campaigns to boost deep $OHM liquidity with broad adoption in DeFi across tiers and chains.

See also

This is part of a three-pronged approach to driving adoption. The other pillars include a reserve pillar to create purchasing power and a utility pillar to drive the use of $OHM as a currency that can be exchanged for a whole host of tokens in DeFi, as well as services and products.

____________________________________

Follow us on Twitter for the latest posts and updates

Join and interact with our Telegram community

____________________________________

____________________________________

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers