OlympusDAO Strives to Revive with ‘Inverse Bonds’ Offering

After Losing 98% of its Value OlympusDAO Bets Big on a New Tack

By: Samuel Haig Loading...

OlympusDAO Strives to Revive with ‘Inverse Bonds’ Offering

It may not be quite a Hail Mary, but the OlympusDAO community is voting on whether to deploy the project’s Protocol-Owned Liquidity for its new Inverse Bonds product.

OlympusDAO burst onto the scene in April 2021 and immediately raised eyebrows with its aggressive token emission schedule for stakers. While the price of its native OHM token rallied more than $1,300 between May and October, a spate of controversy, including allegations it was a ponzi scheme, poleaxed its value by 98%; OHM now trades at only $28.

Reserve Assets

Now, the protocol is hoping that a new product may reignite demand for OHM.

Olympus’s original bond product allowed the protocol to acquire reserve assets and liquidity by selling OHM tokens in exchange for other assets. Although an effective means to accrue assets for its treasury, the product drove bearish selling pressure on the price of OHM as arbitrageurs sought to take advantage of the discount available.

By contrast, inverse bonds are designed to allow OHM holders to sell their tokens back to the protocol in exchange for treasury assets. The idea is the inverse bonds will push prices to meet a 120-day moving average, and potentially drive up OHM’s price from its current levels. OHM that is removed from liquidity will also be burned.

OlympusDAO Created a Breakthrough DeFi Model – Now It’s Down 93% and Called a ‘Ponzi’
OlympusDAO Created a Breakthrough DeFi Model – Now It’s Down 93% and Called a ‘Ponzi’

OlympusDAO Created a Breakthrough DeFi Model – Now It’s Down 93% and Called a ‘Ponzi’

Olympus DAO is under fire after price drop and liquidations.

The Defiant The Defiant

Olympus writes that the introduction of inverse bonds would mean the protocol will “effectively buy OHM at a premium” and that users will get more value for their OHM compared to selling on the open market.

“The purpose of this change is to show how the protocol is in a unique position to deploy the treasury to guide the growth of the network,” Olympus tweeted. It added that the strategy is intended to reduce short-term OHM holders, mobilize its treasury assets toward sophisticated market operations, and drive buying pressure in the OHM markets.

Healthy Market Behavior

“It is in the interest of the Olympus ecosystem to start using its Treasury to conduct market operations, such as inverse bonds and adjusting liquidity, to encourage healthy market behavior,” the governance proposal states.

If the proposal passes, the protocol will offer inverse bonds for up to 90 days. Inverse bonds will be discontinued once a 120-day moving average has been reached.

The proposal has largely garnered positive feedback from the OlympusDAO community.

In its governance forum ‘stratabatta’ described the move as “an important next step in the journey.” Reubz commented they hope the proposal passes so they can “pump and dump OHM,” adding that inverse bonds would be “perfect for transferring the treasury to swing traders.”

On Twitter, dhanbaobao said, “despite the recent price action and initial ponzinomics, $OHM’s efforts to bring 0 to 1 innovation to the space should be lauded. Much better than just deploying yet another UniV2 to a new EVM compatible chain and farming worthless governance tokens.”

But not everyone is entirely convinced. Iwanwho responded with “Still rekt,” while vz_fab questioned, “When 0?”

In the governance forum, many users expressed qualms with burning OHM after it is removed from liquidity. Nach211 suggested that the tokens could be used to pay contributors or for “future bizdev,” while OhmerSimpson33 proposed leveraging the tokens as collateral for internal treasury management.