Olympus: goodbye Defi 2.0, hello “Real Yield”? 

Olympus, a DeFi protocol with more than $200 million in total value locked up, will reduce the sky-high yield that holders of its native token have enjoyed over the past year and a half as part of its “bond-centric future.”

$OHM has now lost more than 99% of its value from its all-time high and is currently worth less than $11.

OHM’s staking used to provide double-digit annual returns. OHM’s staking on Thursday produced an annualized return of 266%, which was still well above DeFi’s typical methodology. However, Olympus employees who visited Discord to address customer concerns have promised that rate would be reduced to a more reasonable 7% in the following weeks.

As we recently referenced, this brings Olympus’ position closer to the new “Real Yield” Defi narrative being developed in some projects.

Olympus further noted that the less complicated process behind the lower yield will replace the complex mechanism underpinning the high APY.

$OHM holders voted in favor of a proposal to alter the issuance framework, which states, “Under the current framework, there is no possibility of reducing the rate downward.” High annual percentage yields (APY) “when the protocol does not increase” are “simply inflation that [does] not go to productive economic activity” and thus “prevent the (futures) credit markets from functioning at all.”

The market barely reacted to the news, as OHM was down only 0.5% in the last 24 hours.

The staggering returns fueled an explosive expansion, with OHM wallets going from 15,000 in September 2021 to 75,000 in November 2021. Each OHM token became worth about $1,500. Olympus, however, fell just as quickly.

Ownership of the Liquidity Protocol

Olympus was an early adopter of a linkage mechanism that allowed customers to purchase OHM at a discount in exchange for liquidity or the deposit of other assets such as DAI. It was possible to stake the purchased OHM in exchange for more OHM tokens.

Now, OHM tokens can be exchanged for governance securities through a new system called “Invested Bonds”.

Frog memes

The frog memes are one of the hallmarks of the project, and although it may seem stupid if seen through the eyes of traditional finance, it is not, as the communities behind the projects are one of the strongest foundations behind the new decentralized finance.

It is also a measure of project viability and traction. Similar cases abound lately, such as Dogecoin’s Doge dog and $SHIB’s Shiba Inu.

Inverted Bonds

The general public will soon get access to a newly updated version of OHM Bonds.

According to a thread that was posted on Twitter by OlympusDAO on Thursday, passive participation was encouraged as a result of the protocol’s initial high interest rate.

In particular, OlympusDAO asserts that “a lower interest rate incentivizes Ohmies, protocols, and DAOs alike.” For instance, in the not-too-distant future, owners of OHM tokens will have the opportunity to increase their earnings by contributing to liquidity pools rather than merely staking the tokens they own.

According to their most recent Twitter thread, new Olympus will be concentrating on:

1. Stability
2. Sustainable Growth
3. Adoption

They promised that everything they do from here on out would reflect those three principles.