OHM, the token underpinning decentralized finance (DeFi) protocol OlympusDAO, has plummeted almost 28% in the last 24 hours, dropping to $180.03 amid a wider crypto market rout.
According to data provided by CoinGecko, OHM has slipped 87% from its all-time high of $1,415 in April last year.
OlympusDAO, the protocol associated with the OHM token, has recently taken the world of decentralized finance (DeFi) by storm.
Its unique tokenomics have played a key role in defining the “DeFi 2.0” meme, which offers a novel approach to maintaining liquidity. In the past, projects needed to launch expensive incentives programs or yield farming campaigns with high yields to attract liquidity. Once these programs ended, however, the liquidity would quickly move to the next opportunity.
OlympusDAO, and a few other emerging DeFi projects, offer an alternative to this model.
Through a unique bonding and staking scheme, OlympusDAO lets users buy discounted OHM tokens (using other liquidity provision tokens or stablecoins) which mature over time, as well as lock up their OHM to earn up to 4,040.2% APY in the token.
This offers holders a considerable incentive to lock up any accrued OHM. Once locked, these tokens can’t be sold (obviously), thus eliminating sell pressure.
At the same time, the protocol effectively retains a hefty portion of its own tokens too. At press time, OlympusDAO owns 99.99% of all the liquidity for the OHM-DAI token pair.
Though the mechanism is unique, it doesn’t appear to be holding up the price of its native token. Still, its influence on the market has been notable.
OlympusDAO influence on DeFi
Price action aside, Olympus’ design has already had an outsized effect on the rest of the DeFi space.
Its OlympusPro offering, essentially a “bonding-as-a-service” program, lets other DeFi protocols use Olympus’ bonding scheme for their own liquidity needs.
Already, projects like StakeDAO, Bankless, Alchemix, Thorstarter, and others are turning to Olympus-style bonds.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.