The Rise and Fall of OlympusDAO: The Game of High Returns and Unsustainability

In the world of cryptocurrency, OlympusDAO was once a dazzling new star, with its native token OHM soaring to over $1000 at one point. However, the price of OHM has now plummeted significantly, dropping by more than a hundred times. This dramatic rise and fall has sparked contemplation about the mechanisms behind it.

Introduction to OlympusDAO

OlympusDAO aims to create a value-stable reserve currency OHM. Unlike traditional stablecoins, OHM does not pursue a fixed exchange rate with the dollar but achieves relative stability by maintaining purchasing power. Its core mechanisms include bonds (Bonding), staking (Staking), and rebasing (Rebase).

Core Mechanism Analysis

Bond (Bonding)

The bond mechanism allows users to acquire OHM at a price lower than the market rate. In exchange, users need to lock specific assets in the protocol as reserves. This design aims to increase the asset reserves of the protocol, providing value support for OHM.

Staking ( and Rebase )

Users can stake OHM into the protocol to receive sOHM and enjoy high "reset rewards". The reset mechanism adjusts the supply of OHM based on market conditions, with newly issued OHM primarily allocated to stakers. This design aims to encourage long-term holding and control the circulation of the market.

Reasons for the Surge in OHM Price

1. High APY attracts a large influx of funds
2. The staking and bond mechanisms effectively control market sell-off pressure.
3. "(,3)" Game theory marketing strategies promote investors to choose staking.

The Root Cause of the OHM Price Collapse

1. Unsustainable ultra-high APY leads to accumulated inflationary pressure.
2. Changes in market sentiment trigger large-scale sell-offs.
3. Game theory assumptions have been refuted by market practices, and staking is no longer the optimal choice.

Insights for Similar Projects

1. Short-term success often relies on high return promises and effective supply control.
2. Long-term sustainability requires a balance between high returns and stability.
3. Participants should carefully assess risks and avoid blindly following trends.

The rise and fall of OlympusDAO provides valuable lessons for the cryptocurrency market. It showcases the potential of innovative financial models while also warning us to be cautious of unsustainable high-return promises. Future similar projects need to find a balance between attracting investors and maintaining long-term stability.