In a new Medium post, OlympusDAO has released information on the ambitious Olympus12 initiative. Olympus12 is a roadmap of the DAO’s efforts for the next 12 months, focusing on bringing $OHM into widespread use as a DeFi’s reserve currency.
Becoming the reserve currency of decentralized finance has been the stated end goal of the protocol since its inception. However, the team has primarily focused on building more short-term-critical measures like the Olympus Pro program, and a comprehensive upgrade of its contracts to Olympus V2.
With Olympus Pro going strong, and V2 migration complete without issue, the team can now turn its attention to the long-term aims of the protocol.
Is OHM a reserve currency?
No.
At least, not currently. To qualify as a reserve currency, a few economic properties must be true. This applies to traditional assets and computer coins alike. A reserve asset must:
- Serve as a store of value
- Serve as trusted backing
- Serve as a unit of account
- Have deep liquidity
OHM as a Store of Value
OHM has not maintained value well to this point, historically. The price has been driven by speculation and hype around the huge APY paid out to its holders via the rebase mechanism. As the hype dries up and the speculation cools, the price of OHM is approaching the risk-free-value, or the value of treasury assets per OHM token.
Ironically, the plummeting price does mitigate one of the strongest criticisms of Ohm. Some users have been vocal about Olympus DAO, Wonderland, and other Ohm-like protocols essentially representing overpriced hedge funds. With the token price now much more on par with the underlying Net Asset Value (NAV), the fundamentals of the protocol make more realistic sense, even when viewed as a hedge fund.
As token price approaches the backing value, arbitrageurs and the protocol’s internal mechanisms can stabilize the price more efficiently. Some fluctuation is to be expected, but it is very unlikely that we will ever return to the lofty heights of $1,400 OHM. This is maximum pain for users who have dutifully staked their OHM all the way down, but good news for the token as a store of value unit.
OHM as Trusted Backing
Most critically for the reserve currency use case, other protocols must be willing to hold it in reserve.
Right now only a few protocols hold substantial amounts of OHM, including Wonderland and Redacted Cartel. This number absolutely must increase for the DAO to meet its goals. This objective is closely tied to the goal of serving as a store of value, as protocols will not risk holding it unless it can retain its value over time.
Most of the Olympus12 roadmap is aimed to stabilize OHM’s purchasing power over time, and increase its adoption as a store of value.
OHM as a Unit of Account
To be a unit of account, other tokens have to be measured against or priced in terms of OHM. This is not currently the case, with the exception of some Olympus Pro program bonds. For this to change, either other protocols must build on OHM, or more OHM/XXX token pairs must be created.
The DAO has identified both of these avenues, and has plans to address them in the Olympus12 roadmap. Efforts will include more Olympus Pro partnerships, and Liquidity-as-a-Service ventures.
OHM Liquidity
OHM actually does this well already. The protocol owns the overwhelming majority of the liquidity for its pools, ensuring that there cannot be a bank run or liquidity pool draining. The fees from these pools also come back to the protocol for increased efficiency.
The OHM/DAI pool is one of the single deepest liquidity pools in DeFi at present. Even large amounts can be swapped through without much price impact.
Long-term, the protocol will have to continue to maintain its pools and improve the liquidity of other pairs. A centralized exchange listing would also improve access to OHM by way of easy fiat onramps, but no whispers of this have been heard yet.
Will OHM be the DeFi reserve currency?
Maybe.
The DAO still has to execute on the roadmap. But refocusing on the goal of becoming DeFi’s reserve currency sets OlympusDAO apart from other Ohm-like protocols. Daniele Sestagalli’s Wonderland has pivoted to acting as a hedge fund and defacto war chest for his Frog Nation protocols. Klima DAO‘s ambitious carbon-backed scheme has not survived well as speculation dies down. A long, long list of other Ohm-like protocols have fallen by the wayside, either rugged, abandoned, or slowly bleeding to zero.
Only Olympus remains focused on its original premise – Become the reserve asset of decentralized finance. Time (not $TIME) will tell if Zeus will succeed.
