Olympus DAO Plummets 25% Amid Market Decline

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Olympus DAO has been hit hard by the recent market selloff and is quickly approaching its all-time low of $163 set over the summer. 

Olympus DAO Enters Freefall

Investors are fleeing Olympus DAO.

The decentralized reserve currency protocol is down over 87% from its all-time high achieved in April last year amid a selloff across the market. Olympus DAO’s downward trajectory has accelerated over the last week, shedding 43.5% of its value. The OHM token is down 24.9% in the last 24 hours, currently trading at $183. It’s about 12% away from its all-time low of $163 set during the May 2021 market crash. 

OHM/USD chart. Source: CoinGecko

Olympus DAO was the first crypto project to utilize a circular tokenomic structure to draw in liquidity. Thanks to Olympus DAO’s clever tokenomic mechanism, investors can earn outsized yields for bonding assets and staking the OHM token. This so-called liquidity “flywheel” has proven effective while the market impulse is bullish and has inspired many fork projects such as Wonderland Money. The Olympus DAO frenzy hit a peak in late 2021 as various digital assets soared to new highs, and by November it had hit a $4 billion market cap. 

However, as the May crash and more recent price action have shown, Olympus DAO appears to suffer more than other projects when the market declines. Olympus DAO’s design has attracted criticism from many crypto enthusiasts who liken the project to a Ponzi scheme. This is because Olympus and other such projects need new money to enter the protocol to prop up the incentives for existing investors.  

Other protocols that use a similar tokenomic structure to Olympus DAO have also been hit hard. Wonderland has also experienced similar losses, trading down 34.6% over the past week. On Ethereum, Olympus DAO fork Redacted Cartel is also bleeding despite almost tripling in value since its launch mid-December. The protocol’s BTRFLY token dropped approximately 34% during the recent dip, but has since partially recovered. 

Since the start of the year, the crypto market has been hard hit after a weak end to 2021. Bitcoin briefly dipped below $40,000 Monday and is down 10% on the week but appears to have found support at current levels. Ethereum has fared worse, seeing a weekly decline of 17%. The second-biggest crypto asset also appears to have stabilized after testing support at $3,000. The latest dip follows the Federal Reserve’s Jan. 5 confirmation that it would hike interest rates, which also shook crypto and stocks. 

However, while most crypto assets are following Bitcoin and Ethereum’s downward trajectory, there are some exceptions. NEAR Protocol, a sharded Layer 1 network, has bounced back from temporary weakness, gaining 17% in the past 24 hours. Elsewhere, the privacy-focused Oasis Protocol has also shown strength, rising 16.5% in the same period. Whether these assets will continue to decouple from the wider market remains to be seen. 

Disclosure: At the time of writing this feature, the author owned ETH, NEAR, and several other cryptocurrencies. 

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OlympusDAO Fork Snowdog Hit By 90% Crash

Key Takeaways

  • Snowdog has crashed over 90% following the protocol’s planned token buyback.
  • During the buyback, only 7% of SDOG holders were able to sell their tokens at a profit.
  • Some members of the Snowdog community have accused the developers of using the buyback to exit their positions first, leaving everyone else holding the bag.

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Snowdog, a self-styled decentralized reserve meme coin, has been accused of pulling the rug on its community after crashing over 90%.

Snowdog Plummets 90%

SnowdogDAO has sent investors reeling this Thanksgiving. 

The Avalanche-based OlympusDAO fork plummeted over 90% Thursday night after the protocol’s planned token buyback resulted in a huge selloff. 

SDOG/USD chart. Source: CoinMarketCap

Snowdog, which styles itself as a “decentralized reserve meme coin,” allowed users to mint SDOG tokens at a discounted rate by depositing other assets as collateral. Snowdog attracted liquidity in much the same way as OlympusDAO, the first protocol to utilize the so-called “liquidity flywheel” model. In recent weeks, many OlympusDAO forks have emerged on Ethereum and other blockchains amid growing interest in the protocol. 

The OlympusDAO liquidity flywheel (Source: @RyanWatkins_)

Snowdog differed from other OlympusDAO forks in that it only planned to be active for eight days. The protocol announced on launch that it would use all of the assets in its treasury after eight days to orchestrate a “massive buyback” of Snowdog tokens ahead of transitioning into a meme coin by fractionalizing each SDOG token by a factor of one billion. 

The planned buyback resulted in many holders accumulating SDOG tokens in anticipation of a substantial price increase. However, when the buyback started late Thursday, the Snowdog token instead plummeted, eventually losing over 90% of its pre-buyback value. 

The price crash caused many in the Snowdog community to accuse the developers of “pulling the rug” by using the buyback to exit their positions first, leaving other investors stuck in their positions as prices crashed. 

However, others have refuted this accusation, stating that the transaction data does not show any evidence of foul play. 

Early Friday morning, the Snowdog team published a post-mortem report detailing why the SDOG token crashed. The developers apologised for failing to clearly state how the buyback would likely affect prices. An excerpt of the report read:

“We wanted to orchestrate an event that could capture the attention of the crypto ecosystem while procuring entertainment to people watching it from the sidelines… For the $SDOG price to be above market price before buyback (~$1200), sellers needed their $SDOG to be part of the first 7% of the supply being sold.”

With only 7% of the SDOG supply having the potential to be sold at a profit during the buyback, many holders were forced to sell below market price or face further losses, resulting in a 90% drawdown. 

The post-mortem also outlined future plans for the SDOG token, detailing how the team aims to create long-term value for holders. However, many community members have declared that they have lost interest in the project following the crash. Whether the Snowdog community will be able to recover from the incident remains to be seen. 

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Olympus DAO Posts Rally, Aiming for New All-Time Highs

Key Takeaways

  • Olympus DAO’s OHM token is quickly approaching its all-time high.
  • The project’s clever tokenomics are drawing in users and providing value.
  • A strong community and meme culture surrounding the project are also helping the DAO to grow.

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Olympus DAO has bounced off its summer lows and is rapidly approaching a new all-time high. The project’s clever tokenomics, strong community, and meme culture are all driving adoption. 

Olympus DAO Climbs Higher 

While other crypto assets swing with market volatility, one project has consistently climbed higher in the background. 

Olympus DAO has risen more than 160% over the past month as interest in the project reaches a fever pitch. The OHM token is currently trading at $1,224 and is roughly 13.6% short of its all-time high of $1,415 achieved earlier this year in April. During the market crash in May, the project was hit hard, losing almost 90% of its value and dropping to an all-time low of $162. It has since rebounded with strength. 

OHM/USD Chart. Source: CoinGecko

Olympus DAO is the DeFi protocol that issues the fully collateralized, free-floating OHM token. The project’s ultimate goal is to create a stable crypto asset. However, when looking at the historical price swings of the OHM token, this may seem counterintuitive.

The current previous volatility is intentional in the early stages of the project. The DAO’s current objective is to first grow the supply of OHM tokens, with stabilization coming later. In order to grow the token supply, Olympus DAO has constructed a clever tokenomic system to draw in new users and provide value. 

The DAO works by allowing users to bond other crypto assets such as MakerDAO’s Dai stablecoin to the protocol, receiving newly minted and discounted OHM tokens in return. This brings in assets to the DAO, which are then deployed to generate yield. 

OHM token holders can stake their tokens to receive the yields generated by the DAO, which incentivizes them not to sell their OHM. This, in turn, creates more belief in the future of the project as yields keep increasing. When the OHM token yield increases, the market values the tokens higher, increasing the price. This encourages more people to bond their assets in exchange for discounted OHM, thus completing the cycle. 

Source: @RyanWatkins_

This tokenomic “flywheel” will only work if enough people are using the protocol to set it in motion. Olympus DAO has drawn users to the project through its strong community and meme culture surrounding the project. 

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On social media, many proponents of Olympus DAO (who refer to themselves as “Ohmies”) sport the (3, 3) suffix in their names to indicate allegiance to the project. The (3, 3) tag references the game theory of how the project works. If a user stakes OHM tokens, it is conceptualized as a +3 positive for the DAO as it causes scarcity, increasing the price of OHM. If all DAO participants choose to stake their OHM, it results in the highest possible net positive for all token holders, represented by (3, 3). 

The game theory of Olympus DAO. Source: Olympus DAO Medium

The game theory meme format has become so prominent that it has even extended to other projects. For example, users of another DeFi protocol, Tokemak, have adopted a similar meme using radioactive signs instead of numbers. 

Source: @TokenReactor

Additionally, Olympus DAO has gone on to inspire several similar projects. The recently launched TempleDAO takes inspiration from Olympus’ meme culture. At the same time, Wonderland, a direct fork on Avalanche, was created by DeFi 2.0 pioneer Daniele Sesta, and has received the blessing of the Olympus DAO team.

Currently, the OHM token price looks strong, with more trading volume than ever before. While the tokenomics suggest that the price will continue to increase, critics have likened the protocol to a Ponzi scheme. Whether Olympus DAO will be able to sustain its current rate of growth remains to be seen. 

Disclaimer: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies.

This news was brought to you by ANKR, our preferred DeFi Partner.

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