Olympus (OHM)

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Rebase token. Olympus is a protocol that is responsible for the issuance and management of an algorithmic, free-floating "stable" asset, OHM. But it got famous for its bonds and high APYs at the start.

Basics

"The dollar is controlled by the US government and the Federal Reserve. This means a depreciation of dollar also means a depreciation of these stablecoins. OlympusDAO aims to solve this by creating a non-pegged stablecoin called OHM. By focusing on supply growth rather than price appreciation, OlympusDAO hopes that OHM can function as a currency that is able to hold its purchasing power regardless of market volatility."

History

"Once the poster child of the “DeFi 2.0” movement, Olympus DAO has had a rough year.

Taking another step toward its “bond-centric future,” Olympus, a DeFi protocol with more than $200M in total value locked, will slash the sky-high yield that holders of its native token have enjoyed for the past year and a half.

Staking OHM once yielded six-digit APYs. On Thursday, the annualized return for staking OHM was 266% – still far above the average DeFi protocol. But that rate will be cut over the next several weeks to a mere 7%, according to Olympus representatives who took to Discord to answer users’ questions.

The eye-popping yields fueled rapid growth, with the number of wallets holding OHM jumping from 15,000 in September 2021 to 75,000 that November. At one point, each OHM token was worth almost $1,500. But Olympus fell just as quickly.

OHM is now worth less than $11, down more than 99% from its peak.

Olympus pioneered a bonding model by which users could receive discounted OHM by providing liquidity or depositing other assets like DAI. The vested OHM could then be staked for more OHM tokens.

The protocol has since moved to ‘Inverse Bonds’, which allow OHM holders to redeem their tokens for treasury assets."

Audits & Exploits

  • There is currently no Olympus Finance Bug Bounty program (1-8-2021).
  • From their docs (6-2021):

"The first audit by PeckShield was completed on the 9th of April 2021. It covered all deployed smart contracts at the time.

The second audit by Omniscia was completed on the 28th of May 2021. It covered treasury, distributor, staking and bonding smart contracts at the time."

The second audit had a large amount of issues, but almost all were addressed.

  • Scored 68% on DeFi Safety (26-7-2021, but got released as an update in 12-2021):

"Activity is 300 transactions a day on contract OlympusStaking.sol.

There is no software function documentation in any of the Olympus Finance documentation. As per the SLOC, there is 109% testing to code (TtC). There is no evidence of code coverage in any of the Olympus Finance documentation or in their published audit reports. However, they did do a reasonable amount of tests. There is no evidence of an Olympus Finance Formal Verification test."

  • Previously cored a 54% (1-8-2021):

"These are two high quality audits where recommendations were implemented. PeckShield published a Olympus audit report on April 9th 2021. Omniscia published a Olympus audit report on May 28th 2021. Most fix recommendations from both audit reports were successfully implemented by the Olympus team. Olympus Finance was launched in early March 2021."

Bugs/Exploits

"A thief made off with 30,000 OHM tokens—worth about $300,000—early this morning. But the attacker either had a change of heart or was a white hat hacker all along, as they sent back the funds to the DAO hours later." “We have closed the affected markets and all other funds are safe,” Olympus added." “We need to clarify that these are NOT OlympusDAO contracts,” PeckShield tweeted. “Instead, the affected one was written by Bond Protocol, which was used for pilot launch of OHM bonds.”

"On November 22, 2021 OlympusDAO lost $1.43M as a result of a vulnerability in its bond contract."

Governance

Admin Key

"Important OHM update: ERC-20 contract is not behind a multisig and the 1 admin key is lost. This is a major opsec concern. The key owner would have the ability to mint OHM to any address. We have been told it’s a high priority item to migrate this contract."

"Ownership of contracts has been migrated to multi-sig wallets. The distributor and bond contracts are under the policy multi-sig, while the staking contracts and treasury are under a separate multi-sig wallet. This is a significant step in ensuring the decentralization and security of the protocol. The needed signatures are: Policy: 3/5, soon to be 4/6 Treasury: 2/3, soon to be 3/5"

"a) Clearly labelled as upgradeable through voting on protocol implementations.

b) Defined DAO community voting roles

Pause control is mentioned, but there are details on the capabilities or test results in their GitHub repository."

DAO

  • From their blog (11-3-2021):

"We are launching with a Genesis DAO setup inspired by the guys at BarnBridge. The Genesis DAO is an Aragon company composed of team members, investors, and advisors. The Genesis DAO exists for no purpose beyond executing the decisions of the community. The Genesis DAO holds all critical powers. These include fund rescue functions in case of exploit or bug, contract ownership for migrations, and control over the DAO treasury. All decisions are subject to a 30% quorum, 70% consensus, and 2 day voting period. The team will retain a few non-critical powers that may be needed on shorter notice. These are policy control and halt functions. In the case that something bad happens, we cannot move funds or change contracts, but we can halt the ones that exist."

  • From the docs (6-2021):

"Olympus is DAO-governed. All decisions are formed by community members on the forum and made by token holders through snapshot voting."

Treasury

"Has voted to deposit 77M DAI into MakerDAO’s DAI Savings Rate (DSR) module." It will earn 1% yield.

"The current value of the assets in the treasury sits at over $70 million, with its composition sitting at roughly 71.8% DAI, 27.8% FRAX, and 0.4% SUSHI"

  • From their blog (24-4-2021):

"During our first run, the treasury was worth a 0.1% of our market cap. Today, that sits at 12.4%. Put differently, we started with OHM priced at 844x its backing, and today it is priced at 8.1x. This number is a bit different when you count the value of the liquidity that was in the DAO. This is the more accurate value, though it is no longer that relevant. Accounting for that, we’ve gone from 45x to 7.8x."

Token

Launch

Token Allocation

  • There is no maximum supply. It is elastic.
  • 90% of revenue goes to stakers, 10% goes to the DAO (2-2-2021).
  • From their blog (24-4-2021):

"The initial OHM supply was distributed to members of the Olympus discord as alphaOHM on March 15th."

  • The Discord drop was still paid for,  with $4 per OHM.

Utility

"90% of the protocols revenue is paid out to [stakers], via the rebase mechanism."

Other Details

Stablecoin

Coin Distribution

  • There are 848 holders of OHM (10-7-2021). With most of the tokens within the staking contracts of V1 and V2.

Technology

"With 157 commits and 25 branches, this is a robust software repository."

Implementations

How it works

"The main benefit for stakers comes from supply growth. The protocol mints new OHM tokens from the treasury, the majority of which are distributed to the stakers. Thus, the gain for stakers will come from their auto-compounding balances, though price exposure remains an important consideration. That is, if the increase in token balance outpaces the potential drop in price (due to inflation), stakers would make a profit.

The main benefit for bonders comes from price consistency. Bonders commit a capital upfront and are promised a fixed return at a set point in time; that return is in OHM and thus the bonder's profit would depend on OHM price when the bond matures. Bonders benefit from a rising or static OHM price."

  • OHM gets issued every time bonds are created. If OHM ever falls below 1$, it would get bought of the market by the treasury and get burned until OHM is again on par or above. So far (10-7-2021) the token has traded way above, upwards to $1000+ and is now around $400.
  • From their Discord:

"Let’s use a $1000 bond as an example. Day 0 at the time of purchase , $1000 of cash comes in and a $1,000 debt liability is created. Assume $200 bond price meaning 5 Ohms are to be issued. Day 1: 1 Ohm is issued, this is $200 revenue that goes up and causes the debt to go down to $800 Day 2: another Ohm is issued, revenue goes up another $200 and debt goes down $600 . . . This happens until debt is paid off. Remember that we earn revenue by selling Ohms. It costs us nothing to produce Ohms. Just that to mint 1 we have to ensure 1 Ohm is backed by 1 DAI."

"The DAO has decided that each OHM issued has to be backed by $1 in collateral, though this can be changed by a governance vote. Initially, this consisted of just DAI, with every OHM issued having 1 DAI in the treasury as its backing. However, the protocol has since expanded the treasury to include other assets, such as FRAX as well as OHM-DAI LP tokens from SushiSwap, and OHM-FRAX LP tokens from Uniswap.

Fee Mechanism

Upgrades

Staking

  • If you stake OHM you are part of the (3,3) meme.
  • From the docs (10-7-2021):

"Stakers stake their OHM on the Olympus website to earn rebase rewards. The rebase rewards come from the proceed from bond sales, and can vary based on the number of OHM staked in the protocol and the reward rate set by monetary policy.

Staking is a passive, long-term strategy. The increase in your stake of OHM translates into a constantly falling cost basis converging on zero. This means even if the market price of OHM drops below your initial purchase price, given a long enough staking period, the increase in your staked OHM balance should eventually outpace the fall in price.

When you stake, you lock OHM and receive an equal amount of sOHM. Your sOHM balance rebases up automatically at the end of every epoch. sOHM is transferable and therefore composable with other DeFi protocols. When you unstake, you burn sOHM and receive an equal amount of OHM. Unstaking also requires the user to forfeit the most recent rebase as an exit fee."

"Once staked, holders will receive the new distributions in the form of sOHM, as well as 90% of the yield generated by the assets in the treasury. OHM rewards are paid out every eight hours, with stakers sOHM balance rebasing to account for the new tokens."

Validator Stats

"Currently, over 93% of the OHM supply is staked."

Liquidity Mining

Scaling

Interoperability

Other Details

Oracle Method

Privacy Method

Compliance

Their Other Projects

Olympus PRO

"A “liquidity-as-a-service” treasury solution for DeFi projects that relies on bonds."

  • Multiple projects have made it clear that they will use the program. One of which is Abracadabra.money, which partnered with Olympus Pro and set aside a portion of its token distribution for it.
  • From Decrypt (18-12-2021):

"If, for example, OHM costs $500 on the open market, users can purchase that same token for $450 (plus wait time) through the bonding mechanism. That wait time also keeps folks locked into a protocol much longer than the figures Nansen cites regarding typical yield farmers.

Because this OHM is cheaper as a bond, users are thus incentivized to sell their liquidity in exchange for the project’s native token. This also grows the protocol’s liquidity and lets users get their hands on the token without some of the risks of traditional liquidity provision like impermanent loss, which is what happens when tokens in a pool change prices (either up or down), sometimes reducing people's exposure to the more lucrative token.

The mechanism is unique enough that Olympus has now rolled out a bonding-as-a-service product called OlympusPro. For a 3.3% fee on all bond payouts in a project’s native token, the Olympus team will implement this bonding mechanism for you."

"PoolTogether's recent analysis of their Olympus Pro program where they reported an astonishing 56% of transactions being driven by bots, who almost always sold after the vesting period."

Roadmap

  • Can be found [Insert link here].

"There are also active governance proposals to add ETH and BTC to the treasury. This means that now each OHM is now 2x backed from a mixture of these assets, rather than solely DAI."

Usage

  • In less than 3 months OlympusDAO has been able to generate over $30m in revenue through the sale of Bonds (8-7-2021).

Projects that use or built on it

Competition

  • From their blog (17-3-2021):

"Put simply, the main difference is that ESD regulates supply via debt (liabilities) while OHM regulates supply via equity (assets). "

Pros and Cons

Pros

Cons

Team, Funding, Partnerships, etc.

Team

  • Full team can be found here (12-2021).
  • From the docs (6-2021):

"Olympus was ideated by Zeus and built by a distributed psuedo-anonymous team."

Funding

Partners

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