Can Olympus (OHM) make money from Protocol Owned Liquidity and Bonds?


Olympus (OHM) is a decentralized finance solution built to help Decentralized Autonomous Organizations (DAOs) and DeFi solutions raise money by issuing bonds. Olympus lets DAO operators issue bonds through Olympus Pro. Olympus Pro is a Bonds-as-a-Service protocol and platform that functions as a bond marketplace. DAOs and protocols use Olympus Protocol to create bonds.

Olympus Pro creates bonds by allowing Liquidity Providers (LPs) to exchange tokens for the governance protocol at a reduced rate. This process, called bonding, allows LPs to lock in liquidity by keeping the bonds in Olympus’s Treasury. The hope is that bonding will create stable permanent liquidity for DeFi protocols.

Users create protocol owned liquidity by selling the bonds through Olympus’s bond marketplace. Around 20 DAOs and protocols, including Frax, Alchemix, mStable, Spooky Finance ,and the Stake DAO were selling bonds through the marketplace on 6 December 2021. The bonds give protocols a stable source of liquidity to finance their operations. Olympus’s builders believe bonds are a better source of liquidity than yield farming.


How Olympus Works

Olympus raises money through bond sales and liquidity protocol fees. They put the money into Olympus’s Treasury to ensure liquidity and control the Olympus (OHM) supply.
Olympus uses the Treasury Balance to back outstanding OHM tokens and regulate staking annual percentage yield (APY). They claim the OHM Token automatically compounds yields because it is a treasury backed currency.

The Olympus website claims treasury outflow can outperform staking rewards. On 6 December 2021, Olympus claimed to have a Treasury balance of $745.935 million, $2.767 billion in Total Locked Value and offer a current OHM Staking APY of 7,256%. They claim all OHM minted for staking rewards are backed by a Treasury Reserve.

A feature called OlyZaps allows users to swap any asset, presumably bonds, for Olympus (OHM). They have a Zap-Stake feature now and claim a Zap-Bond feature is coming soon.

They claim the benefits of Olympus’s bonds include more liquidity and greater price stability. Other benefits include better prices, opportunities to buy tokens at a discount, diversified treasuries, long-term liquidity, and new revenue streams such as fees captured from Decentralized Exchange (DEX) trades.

What Value could Olympus Have?

Demand for Olympus’s services could be high because DAOs are becoming more popular and growing fast. For example, Yahoo! estimates the total value locked in DAO treasuries grew by 90% between October 2021 and December 2021 to $15.2 billion. DeepDAO estimates there were 186 DAOs and 164 similar organizations with $12.5 billion in assets under management on 5 December 2021.

There were 1.7 million DAO members and token holders on 5 December 2021, DeepDAO estimates. The largest DAOs were Uniswap with 275,652 members and $2.787 billion in USD value and BitDAO with $2.635 billion in USD value and 14,274 members on 5 December 2021, DeepDAO estimates.

Interestingly, DeepDAO named Olympus DAO, the fourth largest DAO with $733.121 million in assets and 9,076 members. Olympus had 6,465 voting members and a 71.2% voter participation rate on 5 December 2021. In contrast, Uniswap had 1,204 voting members and a 0.4% voter participation rate.

Some other prominent DAOs include Lido, Radicle, Compound, dHedge, , Aave, GitCoin, Decentraland (MANA), and ShapeShift. DAOs are a growing business that is attracting enormous amounts of investment.

Can Olympus Make Money from Bonds-as-a-Service?

Moreover, bonds are big business. For example, Statista estimates investment bankers made $1.286 trillion in deals in the international debt capital (bond) markets in the 3rd quarter of 2021. In comparison, Statista estimates the amount of deals in international debt capital market hit a high of $2.057 trillion in the 2nd quarter of 2020.

I think Olympus could profit from the international debt capital markets because it offers Bonds-as-a-Service (BaaS). For example, a central bank, a sovereign wealth fund, a big investment bank such as Goldman Sachs (GS), or a large corporation, could form a DAO and issue bonds through Olympus.

Thus, I think Olympus could evolve into an investment bank or be acquired by an investment bank because it could become a bond market. Hence, Olympus could be the future of DeFi if DAOs replace traditional bond markets.

What is the Value at Olympus?

Mr. Market thinks there is an enormous value at Olympus (OHM). CoinMarketCap gave OHM a Coin Price of $493.11, a Market Capitalization of $823.211 million, a Fully Diluted Market Cap of $700.928 million, and a 24-Hour Market Volume of $55.946 million on 8 December 2021.
They based those numbers on a Self Reported Circulating Supply of 1.663.068 million OHM, a Total Supply of 1.416 million OHM, and a Maximum Supply of 1.416 million OHM. CoinMarketCap estimates Olympus was the 2,795th largest cryptocurrency on 8 December 2021.

They call OHM a decentralized reserve currency. A reserve currency is a currency that financial institutions hold to create and maintain liquidity. For instance, many Central Banks and investment banks hold US dollars as a reserve currency. The US dollar gives the United States enormous power over the global economy.

A Decentralized Reserve Currency for DAOs

Notably, they built the British Empire with the Pound Sterling’s status as a reserve currency. Historically, the British Empire collapsed in the 1940s, after the US Dollar replaced the Pound Sterling as the world’s reserve currency.

The hope is that OHM will serve as a decentralized reserve currency for DAOs and DeFi protocols. Hence, Olympus could gain enormous power and influence in the DAO world if the OHM becomes the DAO reserve currency.

I think Mr. Market believes Olympus’s reserve currency claims. Notably, CoinBase gave the OHM a Coin Price of $495.56 and a 24-Hour Market Volume of $55.1 million on 8 December 2021. However, CoinBase gave OHM an All-Time high of $1,479.41, which shows Olympus is unstable.

Consequently, I think Olympus (OHM) could be an excellent cryptocurrency for speculators because of its high price and fluctuations. However, I think DAOs are too new a variety of entity to be a safe investment. I advise ordinary people to watch OHM but only buy it if they want to speculate about the future of DAOs and Bonds-as-a-Service.

Originally published at on December 8, 2021.