There are thousands of projects found in the world of cryptocurrencies. Everyone has heard and read about Bitcoin and Ethereum, but there are thousands of others that you cannot read about in the local newspaper or magazine. Some of them look very normal, and others might seem a little bit more suspicious. And yes, that leads us to OlympusDAO and their $OHM token. Currently, it is ranked somewhere around #2200 on CoinMarketCap, and it is currently selling at a price of $600. What is there to know about OlympusDAO? Is this a scam, or is this a fantastic way to earn a lot of money? Here I would like to share some thoughts about the project based on what I have seen, found, and discovered so far.
I first heard about OlympusDAO following some discussions in the StrongBlock community. I have written about StrongBlock in several articles, and through following the community, I discovered OlympusDAO.
- Have you heard about Wonderland ($TIME)? It is a fork of OlympusDAO on the Avalanche blockchain. You can read more about it here.
To understand OlympusDAO, we first need to see the weakness of the current Dollar (US). If you look at stable coins such as USDT and USDC, then they are both pegged to the price of one Dollar. But, what if the US Dollar would suffer because of inflation and the value of it would decrease? So would the value of your stable coins.
The goal of OlympusDAO is to solve this by creating a non-pegged stablecoin called OHM. It is supposed to be an algorithmic reserve currency backed by other decentralized assets. What does this mean? This is the explanation given on the OlympusDAO website.
Each OHM is backed by 1 DAI, not pegged to it. Because the treasury backs every OHM with at least 1 DAI, the protocol would buyback and burn OHM when it trades below 1 DAI. This has the effect of pushing OHM price back up to 1 DAI. OHM could always trade above 1 DAI because there is no upper limit imposed by the protocol. Think pegged == 1, while backed >= 1. (Source: OlympusDAO FAQ)
Seeing that the price of one OHM is approximately $600, we are very far from the 1 DAI = 1 OHM scenario, but to understand the token and its purpose, this is still worth taking into consideration. It is also important to know that the project is backed by its own treasury, and based on my knowledge, the project has bottom support for the project at $30, meaning that the treasury will start to automatically increase the price of the token in case it should fall below $30.
The OlympusDAO team
Who has created OlympusDAO? According to the OlympusDAO website, it was “ideated” by Zeus and built by a distributed pseudo-anonymous team. What does that mean? We don’t really know. What I do know for sure is that if the ship would go down, we wouldn’t know who to blame and who to contact with our complaints! There are, however, some of the community members and people working on the protocol who have gone public, so even though the main creators are anonymous, some of the members are still known by their names.
Why are people buying OHM tokens?
Currently, there is a volume of approximately $8,000,000 – $10,000,000 per day for the token. The biggest trading volume is on SushiSwap, but Uniswap is also a popular place for trading $OHM. But, why should anyone buy this coin?
People buy OHM because it has an incredibly high APY – currently more than 7,500% per year.
Yes, you read that correctly. If you buy OHM and stake it at https://www.olympusdao.finance/ you can currently enjoy an APY exceeding 7,500%.
What does this mean? How does this work?
- First you purchase OHM tokens on SushiSwap or Uniswap.
- Then you visit the OlympusDAO website: https://app.olympusdao.finance/#/dashboard
- Now you connect your MetaMask wallet to the website and you can stake your tokens at the website to receive the fantastic APY.
The interest is paid approximately 3 times per day, and it is automatically added to your number of staked tokens. What does this mean?
Let us say that you stake 50 OHM tokens at the website.
According to the website, you will currently receive approximately 6% interest on your token within 5 days. They also say that you will have your initial investment returned within 60 days. What does this mean?
- After 60 days, you own 100 OHM tokens (since it has been doubled).
- After 120 days, you should own 200 OHM tokens.
- After 180 days, you should own 400 OHM tokens.
- After 240 days, you should own 800 OHM tokens.
- After 300 days, you should own 1600 OHM tokens.
- After 360 days, you should own 3200 OHM tokens.
Of course, this is just a wild calculation, but it should look something like this.
What does this mean? Most likely, the price of OHM will decrease a lot with time due to selling pressure. But still, since your 50 OHM tokens have turned into 3200, you will most likely be in a nice plus no matter what.
Of course, the APY has changed a lot since the protocol was launched, and it will most likely decrease over time, but no matter what, it is still a sensational APY.
In an even easier example, 1 OHM token should turn into approximately 75 tokens in one single year!
If it sounds too good to be true, it probably isn’t true!
Have you heard this before? If something sounds too good to be true, then it probably isn’t! Well, we have seen many scammers enter the crypto world, and then they suddenly disappear. With decentralized exchanges like SushiSwap and UniSwap, it has been made even easier as those behind a project can simply dump their tokens, and then the liquidity providers will be stuck with tokens worth nothing in the end. But, should you be worried about OlympusDAO? Is this too good to be true?
To be honest, it sounds too good to be true. But, does that mean that this is a scam? Not necessarily, but I would be very careful!
Why does the price of OHM become irrelevant in long term?
As illustrated above, your OHM balance will grow exponentially over time thanks to the power of compounding. Let’s say you buy an OHM for $400 now and the market decides that in 1 year time, the intrinsic value of OHM will be $2. Assuming a daily compound interest rate of 2%, your balance would grow to about 1377 OHMs by the end of the year, which is worth around $2754. That is a cool $2354 profit! By now, you should understand that you are paying a premium for OHM now in exchange for a long-term benefit. Thus, you should have a long time horizon to allow your OHM balance to grow exponentially and make this a worthwhile investment.
Source: OlympusDAO website
Things that you should take into consideration
- We don’t know who has created this protocol. It doesn’t have to make something a scam, but it is a red flag.
- OlympusDAO has a big community with active members. That doesn’t guarantee anything, but it is a positive sign.
- They have no big and serious partnerships, no endorsements from large players in the cryptosphere. This is a red flag!
- The fact that it sounds too good to be true also raises a red flag!
- They do not promise that the price of the token will remain at the current level, nor do they promise that the APY will remain. This is a positive!
- You can unstake your funds at any time, they are not locked up. This is positive as you can leave the ship whenever you want to.
It sounds very tempting with the fantastic APY of the project, and I believe many will be tempted to join. I can totally understand that. But, before you buy OHM tokens, I would do some more research, and I would be extremely careful, as there are many red flags about this project. The red flags do not make this a scam project, but it means that you should be extra careful and only invest money that you can lose without getting into trouble.
I have invested some money in this project myself, just for the sake of trying. If it is as great as it sounds, I want to be a part of it. This is not financial advice, but I just wanted to let you know that after you have read this article. For those looking for a safer investment with an annual interest between 4% and 12%, I can warmly recommend Nexo.
What is your experience with OlympusDAO? I would love to hear your thoughts, experiences, questions, comments, or whatever might be on your heart!