Reward rate drops to 7%
Once the poster child of the “DeFi 2.0” movement, Olympus DAO has had a rough year.
Olympus, a DeFi protocol with more than $200 million in total locked value, is taking another step toward its “bond-centric future” and will cap the sky-high yield that holders of its native token have enjoyed over the past year and a half.
Staking from OHM once yielded six-figure APYs. As of Thursday, the annualized return for staking OHM was 266% – still well above the average DeFi log. But that rate will drop to just 7% in the next few weeks, according to Olympus officials, who reached out to Discord to answer users’ questions.
Stunning returns fueled rapid growth, with the number of OHM wallets increasing from 15,000 in September 2021 to 75,000 in November. At one point each OHM token was worth nearly $1,500. But Olympus fell just as quickly.
OHM is now worth less than $11, down more than 99% from its peak.
OlympusDAO has created a groundbreaking DeFi model – now it is down 93% and dubbed “Ponzi”.
Olympus DAO is under fire after price drops and liquidations.
The vision of OlympusDAO is big: It wants to “give the digital world its own currency”, as its pseudonymous founder Zeus puts it.
Protocol native liquidity
Olympus pioneered a bonding model that allowed users to obtain discounted OHMs by providing liquidity or depositing other assets such as DAI. The vested OHM could then be used for further OHM tokens.
The protocol has since transitioned to “inverse bonds,” allowing OHM holders to redeem their tokens for Treasury assets.
OlympusDAO aims for revival with “Inverse Bonds” offering
After losing 98% of its value, OlympusDAO is big on a new course
A new iteration of OHM Bonds is expected to launch soon.
The protocol’s initial high interest rate spurred passive participation, OlympusDAO, the organization that administers the Olympus protocol, said in a Twitter thread on Thursday.
“A lower rate motivates ohmies, protocols, and DAOs alike to actively participate in the network,” according to OlympusDAO. For example, OHM holders will soon receive better rewards for contributing to liquidity pools than simply staking the token.
Simpler Mechanism
In addition, the mechanism underlying the lower yield will be simpler, Olympus said, replacing the Byzantine mechanism on which the high APY was based.
“In the current framework, there is no way to adjust the rate downwards,” read the proposal to change the issuance framework, which was approved in a vote by OHM holders on Wednesday. “If the log does not grow, [high APY] is just inflation [doesn’t] move towards productive economic activity”, a situation that “prevents (upcoming) credit markets from functioning at all”.
Markets barely reacted to the news, with OHM falling a fifth of a percent over the past 24 hours.
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