Modern Frontier · v2
OHM — OlympusDAO
OlympusDAO — protocol-owned liquidity via bonds, rebase staking, (3,3) game theory.
TradFi →Central bank OMO + prisoner's dilemma
Prerequisites
01 · Concept — what problem does it solve?
SushiSwap proved rented liquidity leaves. Olympus inverted the model: instead of paying emissions to renters, the protocol buys its own liquidity outright by selling discounted OHM bonds for tokens. The treasury becomes the LP — liquidity that can never leave — and earns its own trading fees. Wrapped around it: a -staking game whose payoff matrix, (3,3), became a meme and a cautionary tale in equal measure.
02 · Mechanics
- : sell DAI / FRAX / OHM-DAI LP to the treasury for OHM at a discount, vesting over ~5 days → the treasury accumulates assets + .
- Staking rebase: staked OHM balance grows every ~8h epoch; APYs quoted in the thousands of % (paid in supply expansion, not external yield).
- Backing: each OHM is backed by ≥1 DAI of treasury assets; market price above backing = pure premium.
- (3,3): if everyone stakes, price-supportive equilibrium; if anyone sells, payoffs degrade — cooperation enforced only by belief.
03 · Formulas
// rebase supply growth
supply(t+1) = supply(t) · (1 + r_epoch)
APY = (1 + r_epoch)^1095 − 1 3 epochs/day
// bond discount ROI
ROI = (P_market − P_bond) / P_bond
// premium over backing
premium = P_market / backing_per_OHM − 1
04 · Edge cases & risks
- Reflexive unwind — Jan 2022: premium compressed, leveraged stakers (OHM as collateral elsewhere) liquidated, −90%+. (3,3) has no enforcement mechanism — it's (−3,−3) on the way down.
- APY illusion — rebase yield is denominated in OHM; if price falls faster than supply grows, real return is negative regardless of quoted APY.
- The durable idea — POL itself survived the crash: protocol-owned liquidity is now standard treasury strategy across DeFi.