OlympusDAO Votes To Deposit $77M In MakerDAO

DAI Savings Rate Was Increased To 1% In December

By: Owen Fernau Loading...

OlympusDAO Votes To Deposit $77M In MakerDAO

A fallen giant of crypto is set to make a major deposit into DeFi’s oldest and largest lending protocol.

OlympusDAO, which aims to develop what it calls a “decentralized reserve currency” and was the poster child of the ‘DeFi 2.0’ movement, has voted to deposit 77M DAI into MakerDAO’s DAI Savings Rate (DSR) module.

Maker, which issues the DAI stablecoin against overcollateralized debt positions, effectively restarted the DSR when it raised its rate to 1% from 0% in December.

Jennifer Senhaji, of Maker’s growth team, told The Defiant that while a 1% yield would have been laughed at in 2021, times are different now, and OlympusDAO’s imminent deposit shows that the restarted DSR moves the needle.


“This is actually really valuable for DeFi, particularly at this point in the market, because it’s essentially a risk-free yield,” she said, clarifying that there’s no real additional risk in DSR deposits beyond holding DAI.

The stablecoin does have some risks associated with it — one of the most often cited criticisms is that DAI is partially backed by USDC, a centralized stablecoin which has blacklisted crypto addresses in the past.

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The Defiant The Defiant

The DSR was launched in November 2019 and saw rates climb above 7% in 2020. Olympus’ proposal to deposit assets into the DSR cited the module’s battle-tested code as a reason to trust it with $77M.

That figure constitutes over 75% of the project’s DAI, according to a dashboard displaying Olympus’ treasury as of Jan. 27.


Top 10 Olympus Treasury Holdings

As is the norm in DeFi, Olympus doesn’t need to ask permission in order to make the deposit. No members of the project even contacted anyone at Maker before the vote, Senhaji said.

Compound Integration

She added that Maker is in talks with Compound, a lending protocol with $1.6B deposited in its smart contracts, to integrate DSR under the hood to effectively add a percentage point of yield to users supplying DAI on Compound.

The DSR comes with no lockups, so a project or user can withdraw their DAI from Compound whenever they wish. The protocol’s governance would need to approve the DSR’s integration.

It wouldn’t be the first time — in 2019, Compound integrated the DSR when the Maker module first launched.

2021 Yields Were ‘Delusional’

Olympus’ deposit comes at a time when a common view in DeFi is that yields are down, and so open finance is no longer useful.

However, Andre Cronje, the controversial founder of Yearn Finance, a yield aggregator and quintessential DeFi project, released a post arguing that the yields of 2021 were effectively delusional.

“On every feasible metric, real yield and DeFi have grown substantially,” Cronje wrote.

Maker’s redeployment of the DSR may be part of the ‘real yield,’ based on actual user activity on lending and trading protocols, that Cronje is arguing for.

Real World Assets

The collateralized debt protocol has been continuously pushing deeper into real-world asset (RWA) deals and uses revenue from those ventures to pay the DSR’s 1% rate.

While the yield isn’t much compared to U.S. Treasuries these days, the DSR rate is accessed by simply triggering a smart contract. This contrasts with the more onerous process of trading crypto for dollars or relying on a custodial solution to access Treasury yields.

The DSR is also safer than other yields in DeFi, many of which were “rehypothecated,” Senhaji said. Rehypothecation is when an asset which is posted by one entity as collateral to take out a loan, is then used by a lender to collateralize yet another loan.

DeFi 2.0

No project has gone from being the topic of hot debate to near invisibility over the past year and a half quite like OlympusDAO.

At one point, it was a figurehead of the short-lived ‘DeFi 2.0‘ movement, which focused on protocols owning their own liquidity. Ultimately, Olympus’ OHM token crashed over 90% from its highs to the level at which its treasury fully backed it.

Despite Olympus’ fall from grace, the OHM token still has a market capitalization of $282M, according to CoinGecko — that’s ahead of other major DeFi players like decentralized exchanges SushiSwap and Balancer.

Maker’s MKR token has slightly underperformed Ether this year — it’s up 28% while ETH is up 31%, according to The Defiant Terminal.


Maker’s reawakened DSR got another vote of confidence from Vitalik Buterin — Ethereum’s co-founder deposited over $279,000 into the DSR on Jan. 24.