In the field of cryptocurrency, BTC and ETH are often used as settlement currencies, so in order to solve this problem, a stable currency linked to the US dollar, such as USDT, has emerged in the market. USDT seems to be a stable currency, but in fact, the US dollar is controlled by centralized institutions such as the US government and the Federal Reserve, which means that the depreciation of the US dollar will also lead to the depreciation of a stable currency.
OlympusDao wants to create a freely floating reserve currency): OHM, solve this dilemma. Ohm is a currency backed by a "basket" of assets, focusing on supply growth rather than appreciation. OlympusDao hopes that ohm can become a currency, which can control its purchasing power despite the great market fluctuation.
In fact, there is also a roll call here. Ohm is not a stable currency. More precisely, Ohm hopes to become a reserve currency generated by algorithms, backed by other centralized assets (such as Dai). Similar to the concept of gold standard, although the price of ohm is allowed to fluctuate to a great extent, there is a reserve price because there are some reserves in its vault to support ohm.
When you have ohm tokens in your wallet, you can get the same number of sOHM tokens by promising ohm.
Pledge is the main strategy for Olympus to gradually accumulate value. The reward of pledge mainly comes from bond sales (which will be discussed in the ohm supply mechanism below), and varies according to the number of sohm in the agreement, and the rate of return is determined by monetary policy.
Pledge is a passive long-term strategy. Your sOHM will gradually increase, and your cost base will continue to drop to zero. In other words, even if the market price falls below the price you bought, if you pledge for a long time, your sOHM balance will eventually grow faster than the price drop.
The agreement allows users to deposit specific assets, exchange them for ohms at a discounted price, and receive them five days later, that is, 15 rebase. The discount price is located in the middle ROI column of the binding page shown below.
Specific assets include:
This process is equivalent to buying ohms at a discount, but this process is irreversible. You can't exchange ohms for assets that have been deposited before.
The design of arrival after 5 days also effectively prevents the impact of new supply on the currency price, and the discount rate is equivalent to a compensation for delayed arrival.
The discount rate is an automatically adjusted parameter. When the floor price is close to the market price, that is, the premium is low, the lower the discount, the lower the enthusiasm of people to buy bonds; On the contrary, when the premium is high, the higher the discount, the higher people's enthusiasm for buying bonds. This is an important point, which will be discussed below.
Bond sales enable OlympusDao to accumulate the liquidity of the agreement itself. More POL(Protocol Owned Liquidity) can ensure that there are always enough funds locked in the national treasury, which will be used in the trading pool to promote market operation and protect token holders. POL is a very important innovation of the Olympics. The advantage of controlling protocol liquidity is to avoid paying high liquidity rewards for users to deposit liquidity like defi 1.0, which is only unsustainable and will only attract locust users in most cases, which is also the root cause of the weakness of defi 1.0 in the later period.
Bonds are an active short-term strategy. The price discovery mechanism in the secondary bond market makes the discount of bonds very unpredictable. Therefore, buying bonds is regarded as a more active investment strategy, and it must be continuously monitored by investors in order to obtain greater benefits than pledge.
As mentioned above, the margin mechanism, as the revenue source of the agreement, is used to:
Assuming that Olympus calculates RFV = 65,438+05 USD, since one ohm is supported by A Dai, Olympus will cast 65,438+05 ohms, of which 65,438+0 ohms will be given to the player and the remaining 65,438+04 ohms, 90% of which will be given to the pledgee and the remaining 65,438+00 ohms. For the player, the original ohm token of $65,438+0,000 costs only $900, which is equivalent to enjoying a discount of $65,438 +00%, but the price is five days later; For the agreement, after receiving the assets with a market price of 900 dollars, the corresponding amount of ohms will be invested after the assets are depreciated. This shows that:
The source reward of pledge comes from bond sales. The agreement will invest most of the premium in Ohm and distribute it to the pledgee. As long as bond sales continue to grow, APY will remain at a high level.
We already know that ohm's supply is adjusted according to reserve assets. Every time the protocol throws 1 ohm, it supports 1 wear. This 1 Dai is the so-called reserve price. When the price of ohm is less than the reserve price, the agreement will repurchase ohm by reserving assets until the price is greater than the reserve price. There is no upper limit for the price of ohm, and theoretically it can be infinitely greater than the reserve price set at the beginning of 1DAI. Expressed by formula:
In this formula, floor price is inversely proportional to premium. The higher the floor price, the less ohms can be cast at a premium, thus reducing the supply of ohms; On the contrary, if the floor price is lower, it means that the premium can cast more ohms, thus increasing the supply of ohms.
According to this logic, it is easy to draw the following conclusions:
This picture depicts the fluctuation of market price and the steady rise of reserve price over time.
First of all, at the beginning, due to the influx of participants, the currency price will be so high that the discount on buying bonds will become more, which makes later participants choose to buy bonds at a lower cost rather than pledge them directly. The act of buying bonds will promote the rise of national treasury reserves and raise the floor price. When the floor price reaches a certain height-for example, the support price of 100u drawn in the figure, the market price curve and the floor price curve are very close, and the expected loss is only16% when the income on the pledge day is 2%-that is to say, in the market with low loss expectation and high return expectation, more people will be attracted to pledge. At this time, participants who buy bonds enjoy more discounts. After that, they will buy bonds and raise the reserve price ... After this cycle, with the passage of time, the floor price and the market price will gradually approach, APY will gradually decrease, the number of participants will gradually decrease and the market price will slow down. Similarly, the floor price will slow down, but eventually the two prices will converge.
(3,3) is a common slogan of defi2.0, including ohm and all kinds of ohm imitation, so what is the mechanism behind it?
As a user of each Olympic Village, you can make the following three choices:
Then logically sort out the above-mentioned selection behavior in an actual project:
If both A and B choose to buy shares, they can enjoy the benefits of ohmic price increase and compound interest. If A chooses the stock right and B chooses the bond, then B's bond purchase behavior will cast an ohm, which will lead to a drop in the ohm price, which will slightly damage the interests of A who chooses the stock right, but on the whole, A and B are both beneficiaries; If A chooses to sell and B chooses to buy shares, then there is no doubt that B has the biggest loss, and A can only get less income, because he can't get compound interest anymore. If both A and B choose to sell, then obviously, it will be a lose-lose situation.
This table assumes that the APY of ohm disk is stable, but in fact, according to our analysis above, it is impossible to maintain such a high APY for too long, because with the increase of currency price, the probability of choosing bonding will also increase, and bonding will lead to the increase of floor price, thus slowing down the supply of ohm and gradually reducing APY. Of course, the above analysis is more rational. In an irrational market environment, if the pledge rate drops or the ohm disk has a high fever all the year round, APY may also remain at this level. Then, according to the calculation in the chart, the pledge time of 10 ohm and 1 year will increase to 736.438+04 after spending $9068.4. At this time, even if the currency price drops to 9068.4/736.14 =12.3189 USD/ohm-that is, even if the ohm drops by 98.64%, you can still get your money back. In other words, as long as Ohm is pledged for one year, there is a 98.64% chance of making a profit. Of course, this is based on maintaining APY at this level. There are many factors affecting the stability of APY, involving complex market behavior. There is no quantitative model analysis here. In short, investment needs to be cautious.