OHM Holders Wake Up To Blood, How This OlympusDAO Whale Sank Its Price by 44%

In 2021, Ethereum based OlympusDAO and its native token OHM exploded as the protocol onboarded new users seeking to leverage its high annual percentage yield (APY). At its peak, the price of OHM went from $330 to an all time high of $1,639, but the asset seems to be on a downward trend since October last year.

Related Reading | Why This Token Thrives With A 38% Profit While Bitcoin And Ethereum Bleed

OHM trends to the downside. Source: Coingecko

According to Wu Blockchain, a OlympusDAO Whale triggered a cascade of liquidations on the protocol during today’s trading session. This led to a 44% crash in OHM’s price within an hour. At this time, the APY offered to OHM holders stood at around 190,000%.

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As reported by NewsBTC, OlympusDAO is an algorithmic currency protocol that was classified in 2021 as high risk, but with the potential to display a “countercyclical” price behavior by research firm Delphi Digital. In other words, OHM’s price could move against the general sentiment in the market.

However, OHM seems to have been unable to meet its potential or at least seems to have failed at appreciating as the crypto market trends to the downside. OHM’s price action has been driven by early investors taking profits on their gains.

User Freddie Raynolds identified the Ethereum transaction used by a “savage” OlympusDAO user to dump $11 million in OHM. The transaction caused a 25% slippage and $5 million in liquidations for this asset, as Raynolds reported via his Twitter account.

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Recorded on the Ethereum blockchain 12 hours ago, the OHM holder used decentralizaed exchange SushiSwap to swap over 82,526 OHM tokens for $11 million in DAI. The transaction was tracked down to a pseudonym holder called “el sk”, @shotta_sk, on social network Twitter.

The OHM whale apparently sold part of his funds to “survive” the current crypto market conditions. Via Twitter, he claimed the following:

Derisked some of my OHM to ensure my family can weather any economic outcome. Remaining risk on with the rest indefinitely.

Perfect Time To Get Into OlympusDAO?

OlympusDAO experienced an increase in its number of users, its treasury assets, and total value locked (TVL) during 2021. Thus, some users claimed that today’s OHM crash should be leverage as a buying opportunity.

The protocol and its team behind have set out to create “the reserve currency for DeFi” with their 3,3 mechanism and the introduction of new features, including an incubator and a pro version of the platform. However, the protocol has seen a lot of criticism.

Related Reading | Why this OlympusDAO’s product could be amongst DeFi most lucrative

The CIO of Selini Capital Jordi Alexander published a two-part article on OlympusDAO, OHM, and its 3,3 mechanism. Therein, Alexander refers to the protocol as a “ponzi”. Addressing the possibility that his article affected OHM’s performance, he said:

Only selling affects price, there’s no shorting so only whale holders can sell lots. So, you can ask them if they cared, but I imagine they were looking for an exit anyway- Price has been in a big downtrend for weeks.


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OlympusDAO Sheds 30% Triggered by Whale Sell-Off

Key Takeaways

  • The OHM token price fell from $186.61 to $104.60 Monday morning, but has since recovered slightly.
  • The token is now trading roughly 90% below its all-time high price of $1,415.26 recorded in April of last year.
  • Several other protocol’s that use a similar tokenomic structure to OlympusDAO have also been hit hard.

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The value of OHM, the algorithmic token launched by OlympusDAO, has dropped 30% today. Protocols that follow a similar tokenomic model to OlympusDAO have also registered similar losses.

OlympusDAO Token Drops

The OHM token has suffered one of its most intense price hits in a single day.

Around 01:55 am UTC today, an unknown user sold 82,526 OHM tokens worth $11.3 million. That single transaction is believed to have caused a snowball effect on the OHM token’s price, causing it to fall over 35% in less than an hour.

According to data from CoinGecko, the OHM token’s price fell from $186.61 to $104.60 Monday morning. The dump from an “OHM whale” triggered a series of liquidations on lending platforms including, Rari Capital’s Fuse, that further exacerbated the price crash.

The self-stated goal of OlympusDAO is to create a stable store of value that is not pegged to the dollar, as is the case with stablecoins. However, the price action of the protocol’s OHM token paints a different picture. Currently, OHM sits at $127.70 per token, down 30% on the day. Furthermore, the token is trading roughly 90% below its all-time high price of $1,415.26 recorded in April of last year.

ohm price
OHM/USD chart. Source: CoinGecko

OlympusDAO was started by an anonymous developer, Zeus, to reduce DeFi’s dependence on fiat-pegged stablecoins like USDC and USDT. The project uses bonding and staking to back the minting and intrinsic value of its OHM tokens. The protocol has popularized the (3, 3) meme, a reference to the project’s purported game theory model where the most beneficial outcome is achieved if all holders stake their OHM tokens.

Users are incentivized with stratospheric staking yields paid in OHM tokens to contribute to the protocol’s liquidity reserves. Over the last ten months, OlympusDAO has generated a huge treasury value from assets such as FRAX and ETH, as well as from stablecoins DAI and LUSD. Currently, the market value of OlympusDAO’s treasury assets totals $559 million. Meanwhile, the market cap of OHM tokens is almost double that, sitting at $1.099 billion.

Per data provided by OlympusDAO, OHM’s price of $127.7 is backed by $74.50  in treasury assets owned by the protocol. The substantial difference in these two prices shows that OHM is trading at a premium over its fair value, primarily due to the staking incentives and game theory structure of the protocol.

OlympusDAO currently pays a 3,666% annual percentage yield for staking OHM tokens. While the high APYs have worked in OlympusDAO’s favor in bullish markets, the dilutive effect of issuing so many tokens appears to be hitting hard since markets turned bearish in mid-November.

Many of OlympusDAO’s copycat projects have also registered similar losses. Wonderland, an Avalanche-based fork of OHM, is currently trading at $1,527, down 23.5% over the last 24 hours. Meanwhile, other protocols with similar tokenomic structures–KlimaDAO and Redacted Cartel–have also lost 26% and 29% of their value on the day respectively.

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

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$139M Terra proposal to ‘bring awesome UST use-cases’ to DeFi projects

Decentralized stablecoin issuer Terra issued an ambitious proposal to expand the interchain deployment of its UST stablecoin across five projects on Ethereum, Polygon, and Solana.

Terra’s Jan. 6 Research post UST Goes Interchain: Degen Strats Part Three provides details about how $139 million of UST and its native stablecoin LUNA would be utilized and on what platforms if the proposal is passed.

Terra is a blockchain that supplies algorithmic stablecoins and LUNA has market cap ($28.5 billion).

In each proposed deployment, Terra would deposit UST in varying amounts from $250,000 to $50 million to boost the stability of each of the new partner projects. The main aim is to “bring awesome UST use-cases to Ethereum DeFi.” A vote for governance participants to approve the proposal will be held at a later date.

Terra founder Do Kwon made it clear in a Dec. 21 tweet that he wishes UST to be the dominant stablecoin in the crypto market. The distribution aims to help Terra accelerate its efforts in growing its market cap. Currently only stablecoins BUSD ($14 billion), USDC ($43 billion), and USDT ($78 billion) have a higher market cap than UST ($10.3 billion).

DeFi liquidity provider and market maker Tokemak on Ethereum would receive a $50 million deposit in UST for at least six months if the proposal passes.

Permissionless lending and borrowing platform Rari Fuse would receive $20 million UST for six months. The funds would be deposited into three pools on Fuse to help UST become “cheapest stable to borrow” on Fuse.

Yield aggregator Convex Finance on Ethereum would receive $18 million for 6 months. Terra would inject greater LUNA incentives for liquidity providers in several pools across the platform that use UST. Convex is one of the largest DeFi yield aggregators with a market capitalization of $1.9 billion.

Decentralized reserve currency protocol OlympusDAO (OHM) is already partnered with Terra, and will be releasing gOHM, a wrapped version of OHM, on Terra. The proposal for Olympus includes a $1.425 million commitment to its $694 million treasury through $1 million in UST bonds to remain in the treasury “forever” and $425,000 in LUNA incentives for 3 months.

InvictusDAO (IN) is a fork of OlympusDAO on the Solana network. Terra would increase its expansion onto Solana by contributing $250,000 in UST to create IN/UST bonds. Frax Finance (FRAX) will match Terra’s bond contribution with $250,000 in FRAX according to a Jan. 6 AMA,.

USDC and USDT, the two largest stablecoins by market cap, are currently the project’s main holdings in its $71 million treasury. The IN team seemed optimistic about the partnership with Terra and said in the AMA:

”Holding UST helps solve structural treasury problems because we don’t want to increase our USDC and USDT holdings as it comes with centralized risk. UST helps grow the treasury and the amount of bonds we can sell.”

A representative from InvictusDAO told Cointelegraph that the proposed partnership would help the Solana ecosystem: “With the chain being so dominated by centralized stablecoins USDC/USDT, I believe the introduction of cross chain quality stables will benefit the ecosystem immensely.”

Related: Ethereum dominates among developers, but competitors are growing faster

At the time of writing, the proposal appeared to have strong support from governance participants on Terra.