What Is Olympus (OHM)?

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Contributor, Benzinga
December 13, 2021

Community-run protocols, more commonly known as decentralized autonomous organizations (DAOs), are increasing in popularity. The idea of a completely decentralized structure for users appeals to those in the community. Therefore, investors have turned to protocols that are led by its users, such as protocols like Olympus (OHM). 

Within these community-run protocols, investors look for high staking rewards. Olympus may be the jackpot for those seeking to farm OHM and earn passive income. Are these massive returns too good to be true?

Disclosure: ²Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.

Overview of OHM

OHM is an ERC-20 token on Ethereum, which aims to build a community-owned decentralized financial (DeFi) infrastructure with the hopes of eventually becoming a stable cryptocurrency. The biggest difference between OHM and stablecoins is that OHM is backed by but not pegged to a certain price. This terminology means that price does not exactly reflect the dollar; instead, the treasury value helps back the price of OHM, at least to a degree. This structure allows the price of OHM to float rather than be pegged to exactly $1.

Olympus has been called one of the most interesting economic experiments in the DeFi space for many reasons, including its process called bonding. Bonding allows users to sell an asset like DAI or WETH to the treasury and receive discounted OHM in return, which is paid out over 7 days. The Olympus treasury also mints and sells new OHM when it is trading above 1 DAI and buys back and burns OHM when it is trading below 1 DAI.  

OHM History

The Olympus protocol was founded by a group of anonymous individuals known as “Zeus,” “Apollo,” “Unbanksy” and “Wartul.” According to GitHub, the main code contributors were “Zeus” and Jeff Extor. Since its launch, Olympus has begun to run as a DAO, meaning it is governed by its community in a fully decentralized manner through smart contracts. 

Is OHM Useful?

Olympus does offer utility that can be beneficial for many investors. Users can stake OHM, which reduces the supply on the open market and creates value for the protocol. Staking rewards are insanely high for Olympus, currently at about 7,000% APY. The goal behind the aggressive staking rewards is to expand the protocol’s market cap and grow the treasury, which would inevitably lead to the decrease in the dollar value of the token over the long run. 

Where To Buy OHM

In order to purchase OHM, you convert Ethereum or a USD stablecoin using a decentralized exchange (DEX). A DEX like Uniswap is a great way to acquire OHM. 

The first step would be purchasing Ethereum or a USD stablecoin on a centralized exchange like Coinbase Global Inc. (NASDAQ: COIN). Once you have the desired amount you want to convert, you send that to your software wallet. After the funds are in your wallet, you go to a DEX and connect your wallet. Then, choose the coins you wish to swap and proceed with the next steps until you acquire OHM. 

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OHM Blockchain vs. Other Blockchains

Olympus is built on the Ethereum Network, making it an ERC-20 token standard. Since it is built on the Ethereum blockchain, it is secured by a proof-of-work (PoW) consensus mechanism that requires miners to mine new Ether. 

One disadvantage to being built on the Ethereum Network would be the high transaction fees. These fees for blockchain transactions are known as “gas fees.” Other layer-1 blockchains like Solana (SOL) and Avalanche (AVAX) offer gas fees at a fraction of the price of Ethereum, making it a great alternative for developers and investors.

An alternative platform worth noting would be Wonderland (TIME), which is a hard fork of OHM on the Avalanche network rather than Ethereum. Users are able to use many similar features on the Avalanche network with much lower fees, making it a great alternative investment for traders. 

How to Store OHM Safely

The safest place to store OHM would be a hardware wallet like Ledger. Ledger is the most recognized and most credited hardware wallet currently available. The device is primarily an offline hardware wallet. Ledger also connects to Bluetooth and USB, depending on whether you want to use your computer or mobile device. Ledger’s application also makes it much easier to secure, store and manage your assets.

OHM vs. Competitors

When it comes to Olympus versus its competitors, OHM offers unbeatable staking interest rates. However, after accounting for the depreciation of OHM token, the rewards may not be as appealing as they may seem on the surface. If users are looking for staking rewards to earn compounding interest on their investment, then OHM is superior to most yield farm tokens. Additionally, Olympus isn’t good for low fees and fast transactions.

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