What is Olympus? Your ultimate guide

The Olympus (OHM) coin is designed to be stable in relation to real value, not to a fiat

Olympus                                 
Olympus aims to redefine the concept of stablecoin – Credit: Olympusdao.finance
                                

Contents

You might have heard of stablecoins, but are they truly stable? The people behind olympus (OHM) don’t think they are. But what is Olympus (OHM)? How does olympus work? What is olympus used for? Let’s take a look. 

Before we get into olympus and what it does, let’s take a look at stablecoins and how they work.

The nature of stablecoins

The idea behind stablecoins is a reflection of the incredible volatility of a lot of traditional cryptocurrencies. The way prices can rise and fall potentially put people who might otherwise like the idea of a crypto off. On the other hand, there are many issues that crypto enthusiasts might have with traditional fiat currency. For instance, there are concerns about privacy, or the lack of privacy, surrounding fiat currencies.

There are also some people who feel frustrated by what they see as a collective reliance on centralised financial institutions, like banks and regulators. There is also a feeling that fiat transactions are slower than they could be, which also generates frequent criticism, as well as high fees charged to those who need to send money internationally.

So, the idea behind stablecoins is to find a kind of compromise. As their name suggests, they have the stability, like a traditional fiat currency, but they also have privacy, low costs and speed, which are associated with cryptocurrency. 

This all sounds good, and there are more cryptocurrencies coming onto the market on a regular basis. However, while there are some concerns about how some stablecoins are backed, there is another problem that some people have with stablecoins. That is, they are not truly stable. This may sound counterintuitive, but consider this: a stablecoin is pegged to a fiat currency, in the majority of cases the US Dollar. While the coin will use whatever method to keep the currency stable and worth $1, that does not mean that its true value stays the same. If we look at economic and financial history, we can see that what you can get with a dollar, its purchase power, goes down as prices and wages go up.

And while a stablecoin is worth $1 now, was worth $1 this time last year and very much should be worth $1 this time next year, what you can buy with that dollar has changed. For instance, a dollar in 1922 would be worth approximately $16 today. So, there might well be a need for a cryptocurrency that is not pegged to a fiat but, instead, is ultimately worth the same in terms of what a user can buy with it. 

Olympus explained

Olympus is an attempt to solve that problem. If we zoom back in time somewhat, the idea behind bitcoin is that there is a want or a need for a currency that does not have anything to do with central banks. But what if, rather than having a cryptocurrency that was linked to a fiat currency like traditional stablecoins are, we have a cryptocurrency that is, ultimately, backed by other cryptos? This would, at least in theory, allow for a coin or a token which maintains its real world value, rather than a central bank-set value. 

Something that we have to point out about Olympus is that it is run by a decentralised autonomous organisation (DAO). A DAO is a group of people or users who are linked together by a set of rules, with decisions put together on a blockchain. Because the rules of the DAO are set in the code on the blockchain, that means that there is no need for a traditional hierarchy, meaning there is a sense of equality. DAOs, as a general principle, are not to be confused with The DAO, which was a protocol operating on the Ethereum blockchain: that unfortunately got hacked in 2017, thus providing impetus for the hard fork that, ultimately, led to the creating of the ethereum classic cryptocurrency.

Another thing to point out is that the Olympus (OHM) cryptocurrency is not the same thing as the Olympus (OLYMPUS) cryptocurrency. The second one is nothing to do with OHM, but instead describes itself as “the original dual BUSD-Reflect and whale buyback system, with dynamically pegged auto-liquidity generation, anti-snipe and anti-bot features”. It does have a rather impressive logo, though. 

The logo of the Olympus (OLYMPUS) cryptocurrency which features a graphic of the eponymous Greek god
OHM is not OLYMPUS – Credit: olympustoken.io


The OHM token

As far as the OHM coin goes, it is used in the following ways. Firstly, people can stake their OHM. If they do, then every eight hours or so their stake auto-compounds, thus earning them interest. Because people get more interest the longer they have their olympus cryptocurrency staked, this means that this works best as an investment strategy in the longer term. Because olympus has a relatively high annual percentage yield, this encourages people to stake more of their crypto.

Secondly, people can take part in bonding. This involves giving the system liquidity protocol tokens in exchange for OHM coin. What is notable here is that, if you bond, then you can get OHM at a discounted price. In effect, you are getting more olympus for less money. This system also helps provide the liquidity that backs OHM, thus making it more stable in real terms.

In terms of what makes the coin stable, a blog post from early 2021, when the Olympus DAO was launched, explains it thus: “Each OHM token is backed by 1 DAI in the treasury. However, tokens can’t be minted or burned by anyone except the protocol. The protocol only does so in response to price. When OHM trades below 1 DAI, the protocol buys back and burns OHM; when OHM trades above 1 DAI, the protocol mints and sells new OHM. Because the treasury must hold 1 DAI and only 1 DAI for each OHM, every time it buys or sells it makes a profit. It either gets more than 1 DAI for the sale, or spent less than 1 DAI on the purchase.”

Where it was and where it is

As we have seen, the Olympus DAO was launched in early 2021, with the coin coming out later that year. It operates on the Avalanche blockchain. It was founded by a pseudonymous group of developers, calling themselves Zeus, Apollo, Unbanksy and Wartul. As of 14 January 2022, CoinMarketCap says Olympus has a self-reported 1,663,068 tokens in circulation. If this is accurate, this would make it the 2,837th largest crypto, with a market cap of $353,958,113.

FAQs

On 14 January, Olympus self-reported that there were 1,663,068 OHM tokens in circulation.

Olympus was founded by four pseudonymous developers, calling themselves Zeus, Apollo, Unbanksy and Wartul.

Something that makes olympus a little different from other tokens is that it aims to be a coin that is stable in real terms, rather than being stable in relation to a particular fiat currency.

Further reading

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