'Making Sense of the Olympus DAO' dao blockchain
you have probably been going mental trying to understand all the jargon and how this cryptocurrency actually works.
I hope this will help you make the mental leap to wrapping you head around Olympus DAO and its OHM token. Say I want to create a token. Like most I will probably start writing some code in Solidity and issue an ERC-20 coin. Let’s call this mentalToken. I make a deal with a centralized exchange for exclusive rights to sell my token on their platform. In return they get a cut. So effectively I need to pay rent for using the exchange
It is kind of like giving them a loan which they pay you back in OHM with some interest. Hence the name bond.Let’s say this is the stablecoin DAI which is pegged 1:1 to the US dollar. So I buy a 100 DAI bond from Olympus.So, after a few days I can buy 100/40=2.5 OHM and sell it for 2.5*50=125 making a nice profit of 25%.
Olympus DAO is not a blockchain. Rather, Olympus DAO is a protocol, a set of smart contracts, that sits on the Ethereum platform. Let’s keep it simple and zoom in on DAI. In the graph below you can see that Olympus DAO currently owns about $120M worth of DAI.Say the price of OHM is $50. Taking our previous bonding example, bonds get issued and are sold for $40.Olympus DAO says that every 1 OHM should be worth at least $1. And if the price of OHM is greater than $1 it creates more OHM out of thin air. They call this minting.
This theoretical model was conceived by economists to describe societal issues where people acting in their self interest work against the collective societal interest. If I bond but you sell you push the price down. Because I can only exercise my bond after a few days I will lose money.You don’t need to study the matrix too hard as it is meant as a conceptual model for how everyone is expected to behave.
It is different from a stablecoin in that it does not mind if the price of OHM is above $1. You can think of stablecoins aiming for stablecoinToken=$1 whereas Olympus is aiming for OHM >=$1They also provide a chart for how many days they can sustain minting OHM from their treasury if no bonds are sold.Olympus can provide an insane 20K% APY for 267 days given the funds in its treasury.
This could indirectly cause the price to appreciate and allow Google to raise more funds to invest in new projects.What Google just did is rebase their share. Everyone still owns the same % as before. And the company’s valuation has not changed as it continues to do the same business as before.You used to assume 1 share=$3K. Now you need to assume 1 share=$150 Its token is rebasing.
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