What is OlympusDAO Creating and Why Does it Matter? Isfandiyar Shaheen

all right well welcome omis some of you may know what we're up to but for those of you who are not this talk is about what is olympus dow creating higher okay what is olympus now creating and why does it matter olympus dow is creating a decentralized reserve currency that is backed by a community owned treasury money and currency are used interchangeably but they are different as illustrated beautifully in this graphic made by our friends at missouri crypto things like gold and silver are money eath is money bitcoin is money the us dollar is a currency that is usually backed by money much of d5 today relies on stable coins dollar pegged stable coins to settle trades to facilitate transactions uh to provide liquidity the challenge in defy's dependence on stable coins is illustrated beautifully in what is called the impossible trinity this is a concept in economics developed independently by two economists in 1960 and 1962 and what it says is that you can't have a fixed exchange rate free capital flow and a sovereign monetary policy you have to pick two and so in olympus's case the choice is free capital flow and a sovereign monetary policy which obviously means that it's going to create a floating currency that is going to find its stability over time now at olympus when we look at the prominent reserve currency of our time we see the us dollar and we see it having four trades we see we saw it being backed by gold pre-1971 today it's backed by the might of the us government we see the dollar as having deep liquidity you go to any country in the world and you will be able to swap your dollars for that country's native currency the dollar gives purchasing power now for folks in the us this will feel strange but for forts from developing markets like pakistan nigeria india indonesia many folks hold on to their dollars because it does maintain purchasing power relative to their own native currency and finally a reserve currency is considered a trusted backing by other central banks today 55 percent of all central bank reserves are the us dollar and that is what makes it a trusted backing so to now to create a d5 reserve currency we need to replicate the same for trades and so limp is set out to replicate those traits by saying we will create a treasury that will have protocol owned assets the same treasury will own its liquidity so we will have protocol owned liquidity we will create a mechanism that will help our participants maintain and grow their purchasing power over time and if we do all of that other d5 protocols are going to start treating ohm as a trusted backing now let's take a look at how olympus has performed on these four metrics over the last 11 months protocol owned assets in the treasury went from nothing to 480 million the variation that you see is largely coming from the liquidity this orange stuff is the protocol owned liquidity this is the liquidity that is sitting in unison sushi swap which goes up and down as trading happens but the purple stuff that you see are the other stable coin reserves they only go up the gray stuff that you see are the eighth and cvx and some other strategic assets that we own in the treasury the biggest volatility that we've seen over the last two months was in liquidity and that's because omis were highly leveraged there's this whole thing about you know it's fun to be a dj and all and that's what a lot of homies were doing borrowing against their own to buy a lot more home and doing this proverbial 99 strategy and so what happened by november olympus with liquidity at the time of about exit liquidity of about 300 million had 200 million of leverage in the system when selling started liquid cascading liquidations uh happened and the market cap crashed substantially since then um 80 to 90 of that leverage has been cleared and while this has illustrated some drawbacks of protocol owned liquidity the biggest one being that lenders in in environment where this protocol own liquidity have absolutely no risk on the table they can just basically lend it well but what it has also shown us is that once deleveraging happens uh the protocol on liquidities does stabilize and more importantly it did what it promised protocol owned liquidity said we will not arbitrarily remove liquidity you can count on the fact that this liquidity will be there it will not arbitrarily be removed and that's exactly what happened now where olympus really shines in my mind is this notion of what we've called risk-free value so far but that's not the best term because it does carry smart contract hack risk and stable coin debugging risk i'll call these excess stable reserves so olympus has today as of this morning 244 million dollars worth of stable coins most of it is die a lot of it is lusd and there's some fracks these are the stable coins that are owned by the olympus treasury and they are constantly increasing we'll shortly explain how that happens but what this does this rising of excess stable coin reserves is that it really maintains purchasing power now if you look at market cap volatility you won't see it but market cap volatility is not a very useful way to study the progress of a system what you're seeing over here so for us ohm is the currency but when you stake your ohm you get geom which we call the savings account it's this savings account that builds purchasing power this this chart that you're seeing in front of you here's what it's showing the red line is showing that on march 26 if you bought one ohm and it at the time it was backed by one dollar and if you had put it in geom today you would have about 84 ohm because of staking rewards that you've received and since each ohm is backed by about 30 dollars worth of stable coins and reserves your claim on treasury has grown from one dollar to twenty five hundred dollars but that's not all even if you look at the own so the other really fascinating thing about the red chart this got 330 data points and only on 18 of those data points did we did i see index adjusted backing going down um and what's also really the only squiggle that you see is when we were having a token migration other than that this has been a steady move upwards and even uh you know for folks who bought the november top um while you know their position is in the red on a market cap basis their claim on treasury has gone up and it is this claim on treasury that is now helping a lot of other protocols treat om as a trusted backing there is a growing number of protocols that are willing to hold home in their treasury and also to use ohm in order to mint other assets such as fear dao but perhaps the most promising application that i see is with another partner protocol called redacted cartel that has that is now about to do something very interesting so redacted started off by saying that we will treat geom as a reserve asset now redacted is going to deposit this geom with the olympus treasury in order to borrow back ohm and create a liquidity pool pair with their native butterfly and ohm why this is really cool because now butterfly gets to use olympus's protocol on liquidity without creating its own expensive stable coin liquidity so for me it starts feeling like olympus is creating a liquidity programming interface it's almost as if olympus is building liquidity infrastructure and the mechanism the primary mechanism that has created this incredible growth in treasury is bonds and here's how they work so there's two ways you can buy om you can buy ohm by going on sushi swap or uni swap and buying it from the uh amm or you can go to the olympus website where sometimes you can find ohm for a discount to market value now what's happening in the second transaction is that if you let's say are holding die or eth or a liquidity pool token you are essentially giving this token to the olympus treasury that's how the olympus treasury goes but now what the olympus tragedy says to you is okay thank you for this 5 or 14 days worth of liquidity 5 or 14 days later i'm going to release this g ohm 2u and it is this mechanism it's this ability to give the market a discount in exchange for 5 or 14 days of liquidity why 5 or 14 those are the two duration bonds that we're currently doing that drives a lot of this growth now at the end of the five-day period for a bond a bond buyer is faced with a choice do i sell this bond and uh you know realize a four five percent discount return that i had gotten in or do i stick it and earn a 823 apy now it's at this stage people start wondering wait what is this even sustainable how where are these apis coming from this is where the concept of runway comes in runway says that even if zero revenues came into olympus treasury from this moment that 823 apy that you saw can go on for another 634 days the recent jump that you see in runway was driven by a this rewards rate and apy reduction now this has always been the plan some people find olympus for the first time they get in and they say i'm angry because you're reducing the apy or you're reducing the rewards rate rewards rate reductions were always part of the plan they were illustrated in a larger proposal we did called oip18 oip stands for olympus improvement proposal and the key thing to remember about these apis is well where do they come from they don't we don't manufacture these apis out of thin air contrary to what some folks have claimed apys come from excess reserves you remember those 244 million dollars worth of stable coin reserves i showed you we call them excess reserves on line 577 of the olympus smart contract the difference between the excess reserves and the total supply is the total mintable ohm we cannot mint ohm if excess reserves are greater than total supply so that apy that you see comes from this difference and that tells you and so that's also where runway comes from because runway says that if you continue to pay your stakers at a rate of 834 percent you've got 232 million of mintable ohm already it'll take you 634 days to pay out all of these rewards this idea becomes even more powerful and interesting when you start imagining well what happens in a bank run and you start thinking about the stability of the system and this is what this is one thought experiment i find very interesting let's say i am i'm holding point one g ohm i'm the last person left everyone leaves everyone says this is a scam this is a ponzi i don't want to deal with it i'm out i'm the last person standing that'll be amazing for me because if that happens in 6 34 days i will have 232 million ohm and close to a 96 95 96 claim on this treasury that has a risk-free value or an excess reserves of 244 million dollars this treasury is going nowhere and this treasury is what will keep growing at this stage folks ask well what if the treasury growth stops it hasn't the only two troughs that you see are when we were doing a token migration in december and the first one was when bonds were switched off in april other than that even in a very difficult market in january our treasury was bringing in 10 million dollars a week in cash flow every week week after week after week why it's important to ask why why does this work why why do bond sales work bonds work because of this magnificently beautiful equation bond price is one plus bc forget the math you can read the math later here is what it does here's what bond pricing does here's what this equation does this equation causes the bond discount and the bond price to fluctuate and and the developers wrote this really lovely co this really lovely note for other developers in the in the source code of olympus where it says that debt falls with inactivity and rises with deposits but here's the implication this is a really cool part let's say no one bonds for a very long time no one wants for a very long time because we don't like it what will happen is the discount will keep increasing keep increasing keep increasing keep increasing until a market participant comes along and says that discount is good enough for me to speculate that i am now willing to give 5 or 14 or whatever duration of liquidity in order to capture that discount and it isn't facilitating that conversation that we keep finding a market clearing price for about five days worth of liquidity and that is what keeps bonds growing at a very predictable and at a very reliable pace many folks say well this is not revenue this is equity i say look up senior edge revenue central banks print money olympus is a central bank get used to an idea we now have a central bank in the ether that prints money and brings in cash in addition to bond revenue we have a growing roster of non-bond revenue olympus owns its liquidity so every time you trade we're bringing in cash flow into the treasury year to date we've done 37 million dollars in fees on liquidity pools alone but the thing that i found really cool was the community said hey this concept of protocol on liquidity is cool how about we take it to other protocols and offer protocol on liquidity as a service and that was olympus pro which has already brought in 2 million dollars worth of value but what's really really cool this is what i love about olympus pro is how am i doing on time olympus pro was built by the community see like zeus and apollo and the creators of olympus weren't the ones leading the charge it was the community that stepped up and said we feel olympus is we any you talk to any homie there is a strong feeling of community and ownership we believe this is our protocol and that's why many people keep stepping up to say let's create something for olympus that was olympus pro and what really you know like for me what's been really amazing is just the quality of talent the talent density at olympus has blown my mind but don't take my word for it because i'm obviously very biased here's his andre cronier talking about olympus and he's saying you know you can read it but but most importantly is finding the olympus team to be incredibly professional and a painless team to work with absolute pleasure that's when he's working with the olympus pro team to create a protocol owned liquidity solution of their own and it's this community that just keeps producing magical ideas right one amazing project that came out of olympus in the early days was klima dao klima dao said guys you've got a really cool general purpose technology it's a very interesting breakthrough what if we use it to buy a lot of carbon credits what if we use it to drive up the price of pollution what if we use this bonding staking mechanism to build a giant balance sheet of carbon and you know what in four months in four months climate dao has brought on board 16 million tons of co2 that is progress now you can look at the market cap and say oh it's not working well if you judge the success of a project by market cap rise and fall it's going to be hard to have a conversation because there's a lot of human sentiment involved when you look at the balance sheet the fundamentals klima dao has like you know here is the impact of klimata october is when they started that peak that you see in october is driven by klima dao it's driven by bringing carbon credits on here and this is this this was a report from macquarie where they said that you know they see retirement surges in october thanks to crypto coins the crypto coins they're talking about is klima dao now while olympus pro and um um what's it called um klima came out of the community um we've gotten a lot more organized now there's an olympus incubator that's like cultivating more of these partnerships and in each of these partnerships olympus is continuing to take uh you know a stake in in the treasury so so why does um oh one more thing and big shout out to indigo indigo created something on top of olympus a fantastic idea you can take the yield of olympus and a group of homies can get together and redirect it to a project of their choice we think this is a very powerful breakthrough for charitable givings that you can actually redirect the yield on your savings account to fund the charity you can do that through olympus so why does this matter why does olympus matter it's created a general purpose technology you can create it you can use it to create a reserve currency or you can use it to bring carbon credits on chain it's community-led we have a number of people that are not the founders that are stepping up to build companies around olympus i i've created a c-corp it's venture funded plan is to grow the olympus ecosystem and there are many more people like that and finally and this is the really important part we have reached critical mass we've got 170 contributors a 400 million dollar treasury that consistently grows we're here at denver today with a nine figure treasury next year we'll be back with a 10 figure treasury and a much bigger community i'd like to conclude with this beautiful tweet that zeus said uh and i thank him for creating this protocol and i thank him for like reminding us what it means to bet big on people and projects you believe in this was a tweet that came out when uh you know there was a lot of fun and criticism about om and then zeus said we already know what many will come to learn that recent months were not failure in the face of fortune but success in the face of adversity that what is dead may never die the last one is a bit quirky i get that but this is who we are this is what we're building come and talk to us thank you homies if you're in the crowd i'd love to talk