OlympusDAO Sheds 30% Triggered by Whale Promote-Off

Key Takeaways

The OHM token worth fell from $186.61 to $104.60 Monday morning, however has since recovered barely.
The token is now buying and selling roughly 90% beneath its all-time excessive worth of $1,415.26 recorded in April of final yr.
A number of different protocol’s that use an identical tokenomic construction to OlympusDAO have additionally been hit onerous.

Share this text

The worth of OHM, the algorithmic token launched by OlympusDAO, has dropped 30% at this time. Protocols that observe an identical tokenomic mannequin to OlympusDAO have additionally registered comparable losses.

OlympusDAO Token Drops

The OHM token has suffered one among its most intense worth hits in a single day.

Round 01:55 am UTC at this time, an unknown consumer offered 82,526 OHM tokens value $11.3 million. That single transaction is believed to have brought on a snowball impact on the OHM token’s worth, inflicting it to fall over 35% in lower than an hour.

In keeping with information from CoinGecko, the OHM token’s worth fell from $186.61 to $104.60 Monday morning. The dump from an “OHM whale” triggered a collection of liquidations on lending platforms together with, Rari Capital’s Fuse, that additional exacerbated the worth crash.

The self-stated purpose of OlympusDAO is to create a secure retailer of worth that isn’t pegged to the greenback, as is the case with stablecoins. Nonetheless, the worth motion of the protocol’s OHM token paints a unique image. At the moment, OHM sits at $127.70 per token, down 30% on the day. Moreover, the token is buying and selling roughly 90% beneath its all-time excessive worth of $1,415.26 recorded in April of final yr.

OlympusDAO was began by an nameless developer, Zeus, to cut back DeFi’s dependence on fiat-pegged stablecoins like USDC and USDT. The undertaking makes use of bonding and staking to again the minting and intrinsic worth of its OHM tokens. The protocol has popularized the (3, 3) meme, a reference to the undertaking’s purported recreation principle mannequin the place probably the most useful final result is achieved if all holders stake their OHM tokens.

Customers are incentivized with stratospheric staking yields paid in OHM tokens to contribute to the protocol’s liquidity reserves. Over the past ten months, OlympusDAO has generated an enormous treasury worth from belongings resembling FRAX and ETH, in addition to from stablecoins DAI and LUSD. At the moment, the market worth of OlympusDAO’s treasury belongings totals $559 million. In the meantime, the market cap of OHM tokens is nearly double that, sitting at $1.099 billion.

Per information offered by OlympusDAO, OHM’s worth of $127.7 is backed by $74.50  in treasury belongings owned by the protocol. The substantial distinction in these two costs reveals that OHM is buying and selling at a premium over its truthful worth, primarily as a result of staking incentives and recreation principle construction of the protocol.

OlympusDAO at the moment pays a 3,666% annual share yield for staking OHM tokens. Whereas the excessive APYs have labored in OlympusDAO’s favor in bullish markets, the dilutive impact of issuing so many tokens seems to be hitting onerous since markets turned bearish in mid-November.

Lots of OlympusDAO’s copycat tasks have additionally registered comparable losses. Wonderland, an Avalanche-based fork of OHM, is at the moment buying and selling at $1,527, down 23.5% over the past 24 hours. In the meantime, different protocols with comparable tokenomic buildings–KlimaDAO and Redacted Cartel–have additionally misplaced 26% and 29% of their worth on the day respectively.

Disclosure: On the time of writing, the writer of this piece owned ETH and different cryptocurrencies.

Share this text