Olympus wants to create the best currency in the world. It has been designed very well over the past four years to incentivize good behavior from investors and guarantee purchasing power via long-term price predictability. Its north star is to be fully decentralized, programmatic, and codified on public blockchains—a true cryptocurrency in every sense of the original term, and unlike any other “cryptocurrency” that exists. OHM is the token, and Olympus is the protocol behind OHM.
Olympus has seven mechanisms in place to achieve this goal. I will walk through all seven, and then I will explain how they interact and reinforce each other. All in all, these seven mechanisms have been designed to create a flywheel that I believe is going to be difficult to stop.
Treasury
None of the below can happen without the Olympus treasury. Today, Olympus has a war chest of $240 million dollars that it uses in various ways to support the protocol’s goal of long-term purchasing power and price predictability. These specific methods will be described throughout this writeup.
Of the $240 million, $181 million is liquid, meaning it can easily be used at any moment in various market operations. With 15.5 million tokens, that means OHM currently has liquid backing per token of $11.70. In public company terms, this is comparable to a company’s cash per share or book value per share.
Backing per token is an important concept that drives a lot of the below operations.
Protocol-owned liquidity
Because Olympus has its own large treasury, the protocol is able to own the majority of liquidity pools that investors use to trade OHM. If an investor goes to a decentralized exchange and buys or sells OHM, their counterparty to that trade is usually Olympus.
Olympus earns small trading fees for this that go back into the treasury, but more importantly, a large treasury that backs the OHM liquidity pools ensures there will always be a buyer or seller to swap OHM with regardless of market conditions. If you invest in large public companies, liquidity might be taken for granted. In small caps, especially in crypto, guaranteed liquidity during market extremes is not a given.
Range Bound Stability
Range Bound Stability is basically an automated token issuance and buyback program that turns on when OHM’s price moves plus or minus 15% from a trailing moving average. The net effect is a mechanism to stabilize price.
For the most part, just having Range Bound Stability in place ensures price stabilization. The ranges are advertised and made public, so smart investors will naturally step in to buy in size when the price declines close to the buyback level or will sell in size when the price increases close to the issuance level. But the mechanisms are there for when the price does increase or decrease out of range. Below are two examples of how this works in practice.
Let’s say backing is $11.00 and the OHM market price is $10.50. Olympus may implement a large buyback at $10.60. For people who want to sell, this is a good deal because they can sell for above the market price. For Olympus, this is a good deal because they are buying back tokens below backing. Buying tokens at $10.60 when backing is $11.00 increases backing per token. Remember, backing per token is key.
Alternatively, let’s say backing is $11.00, the moving average price is $15.00, and the OHM price shoots up to $18, Olympus might start issuing large amounts of tokens at $17.80. For people who still want to buy, this is a good deal because they can buy for below that market price. For Olympus, this is a good deal because they are issuing tokens above backing. Issuing tokens at $17.80 when backing is $11.00 increases backing per token.
With that being said, Range Bound Stability was actually disabled in late 2024. Here is a quote from Zeus, one of Olympus’s co-founders, about voting to disable Range Bound Stability.
RBS was implemented in late 2022 as a structure to reduce volatility in the OHM market as it contracted and found equilibrium. This was a resounding success and significantly validated the module. RBS has not done a trade in almost three months and has only traded roughly $560k in the past 15-months. Thus, we can conclude that functionally in its absence will not be noticed. However, it does have a significant psychological impact on market behavior, which I would consider beneficial to nullify should OHM return to a greater premium.
If needed in the future, Range Bound Stability can easily be turned back on. It is a good tool to have in one’s back pocket and as Zeus said above, there is a psychological benefit to investors knowing that Olympus won’t allow price to go below backing for long.
But for now, Olympus has created new mechanisms that should improve the protocol and negate the need for Range Bound Stability. The below mechanisms should allow OHM to increase its backing per token and price faster than Range Bound Stability did—while still maintaining price predictability and downside protection.
Cooler loans
Cooler loans are a lending facility that allows Olympus investors to use their OHM as collateral. Because loans are set to 95% of backing, these loans are risk-free to the protocol, which is why they can offer liquidation-free loans that only have a 0.5% annual interest rate. In summary, I can currently invest $100 in OHM, get ~$44 back as a loan to invest in other things, and only pay 0.5% annual interest.
All interest payments go to the treasury to increase backing, which helps support the OHM price. And if I don’t pay my interest my OHM tokens are burned, which benefits remaining OHM holders via fewer tokens outstanding and higher backing per token.
Emissions Manager
When the price of OHM exceeds a 100% premium above backing, the Emissions Manager starts selling OHM into the market via bonds that are slightly discounted relative to the market price. This gives the buyer a slight discount on OHM and in exchange the buyer trades stablecoins that go into the treasury. Every OHM sold at a premium increases backing per token, and higher premiums will increase backing more. As the premium above backing increases, the Emissions Manager sells more OHM. But as those tokens are sold, backing is increased, so there is an ebb and flow relationship between premiums increasing and backing increasing.
Yield Repurchase Facility
On a weekly basis, the Yield Repurchase Facility calculates how much yield the protocol earned the last week and then buys back that amount of OHM over the following seven days.
Today, there is around $52 million cash in the treasury that isn’t being actively used. That $52 million sits in safe stablecoins that currently earns 12.5%. This generates $6.5 million dollars per year going to daily buybacks that are price agnostic and constantly putting buy pressure on OHM. Because the Yield Repurchase Facility is well-funded and buying at any price, investors have more confidence in OHM’s long-term price predictability, which incentivizes more buying that pushes price and premium higher.
Convertible deposits
Convertible deposits are the final mechanism that is about to be launched. Convertible deposits are kind of analogous to less risky call options. I’ll walk through an example to explain how they work.
OHM is currently trading at $25 and let’s say I want to buy one $30 OHM convertible deposit that expires in six months. First, I give Olympus $30 of USDS (a USD stablecoin). Olympus invests that $30 to earn the same 12.5% yield as mentioned above. Over that six-month holding period, Olympus will earn $1.875 of yield and use all of it to repurchase OHM tokens. At the same time, Olympus gives me $30 of cdUSDS that I can do what I want with (hold, reinvest into more OHM, invest elsewhere, etc).
At the end of six-months, if OHM is trading above $30, I give my $30 of cdUSDS back and in return I get $30 of OHM. If OHM is trading below $30, I swap my $30 of cdUSDS for $30 of USDS and have only lost out on the potential yield I could have earned if I invested my original $30 somewhere else. Thus, my worst-case scenario is I breakeven, there is no inflation of OHM supply, and Olympus uses the yield to buy back OHM.
Essentially, instead of getting $25 for one current OHM, Olympus gets $30 for one potential future OHM, but they get the yield in the meantime no matter what. Simply put, buy pressure is created immediately but potential inflation is delayed. And I am risking potential yield, though I do get the $30 of csUSDS to do what I want with in the meantime.
The overall system
So, those are the seven mechanisms that Olympus currently has to support OHM: treasury, protocol-owned liquidity, Range Bound Stability, Cooler loans, Emissions Manager, Yield Repurchase Facility, and convertible deposits. Now, I want to talk more about how they all interact with each other.
The sole purpose of Olympus is to accrue value to OHM. All seven protocol mechanisms are designed to benefit OHM holders. There are no trade-offs like other currencies or reserve assets.
Olympus wants OHM to continuously go up over time in a predictable way. Extreme volatility—even to the upside—is not desired. Thanks to owning and controlling its own liquidity, Olympus sells more OHM as price rises and buys more as price declines. Over time this natural arbitrage adds value to OHM. And because Olympus owns its own liquidity and has more than enough to buy back every OHM token in circulation, there will never be liquidity crunches even during extreme downturns. This should make downturns less severe.
When OHM trades at a higher premium, the protocol mints more OHM, which adds more to the treasury reserves and increases backing. This increased backing reduces the premium and thus moderates the emission rate of new OHM.
Range Bound Stability launched in November 2022, which is what I would define as the beginning of the current state of Olympus. Since then, OHM has consistently and predictably gone up.
And as you can see, this rate of increase has accelerated since August 2024 when the Yield Repurchase Facility was implemented. The Yield Repurchase Facility takes the millions of dollars that Olympus earns in yield and uses it all to buyback OHM every day. This constant buying pressure is mainly what caused the OHM price to go from ~$14 in August 2024 to ~$23 in February 2025.
At that point, the OHM price reached a 100% premium relative to liquid backing per token, and thus the Emissions Manager was turned on. The Emissions Manager sells OHM and increases liquid backing. You might think this dynamic is counterproductive: YRF buys and EM sells, what’s the point?
First, the system is designed so the worst-case scenario is that as the Yield Repurchase Facility buys and Emissions Manager sells, backing per token stays flat. However, it is much more likely that backing per token is going to slowly increase over time as the Emissions Manager sells new tokens at a 100%+ premium. And a big reason this premium is able to be maintained is because of the constant buying pressure from the Yield Repurchase Facility.
These two mechanisms are very symbiotic: buying pressure pushes price and premium up while selling new tokens at a higher premium raises backing per token and thus decreases the premium. This system keeps the premium at a healthy level but also keeps the token price from getting too overheated.
As premium increases, the Emissions Manager sells more OHM, putting more supply into the market, which benefits backing per token, but will eventually increase supply faster than demand. Again, increasing supply at a faster rate during bull markets and decreasing supply during downturns will help to decrease volatility and increase price predictability.
Remember, the goal of Olympus is to create a currency that has guaranteed purchasing power through long-term price predictability. Extreme booms and busts are not conducive to that. Slow and steady price appreciation over time is the goal.
If there is net buying in the market, price will go up and backing per token will stay stable. If there is net selling in the market, backing per token will go up and price will go down. But this probably will not last for long because as backing per token goes up, premium goes down, so for the price of OHM to remain at the same premium, price actually has to go up.
Convertible deposits add to buying pressure due to generating more yield for Olympus to repurchase OHM with. The treasury currently generates around $6.5 million dollars per year in yield on its cash holdings that go to the Yield Repurchase Facility to buy OHM on the open market. Convertible deposits will generate additional yield that also goes to the Yield Repurchase Facility.
Today, I can buy 1 OHM for $25, put it in a Cooler loan, and get $11 back to do what I want with for the duration of the loan. My interest rate is 0.5%, I can’t get liquidated, and I stay invested in OHM. With convertible deposits, I can buy 1 potential future $30 OHM for $30 and get $30 back to do what I want with for the duration of the CD. I only stay invested in OHM if the price is >$30 at expiration though.
Given the positive price predictability of OHM, I expect a lot of investors will opt to buy convertible deposits instead of regular OHM tokens. I also expect convertible deposits to take share from Cooler loans, which is good for Olympus. In the above simplified example, the convertible deposit generates $3.75 of annualized yield that goes to the Yield Repurchase Facility to buy back OHM with. Thus, investors buying convertible deposits put direct buying pressure on OHM, which increases the chances of their own strike price coming to fruition. Alternatively, if this same investor keeps their money in a Cooler loan, Olympus earns $0.55 of annualized yield on that position.
Below is a visual representation from Olympus showing how money flows through its current ecosystem.
So, that all sounds and looks great. What could go wrong?
Olympus is designed to be extremely resilient and self-correcting. If the flywheel slows down, the mechanisms in place will get it spinning faster again. Let’s walk through how.
Crypto is very volatile and historically has significant boom and bust periods every few years. What if there is a big downturn in crypto and OHM trades below backing? In that case, Olympus would automatically buy back a ton of tokens below backing, which would both decrease supply and increase backing per token. They would probably turn Range Bound Stability back on to make it very clear to the market at exactly what price it will be doing significant buybacks at.
In addition to these incremental buybacks, Olympus would still have tens of millions of dollars of idle cash earning yield. This yield would still be going to the Yield Repurchase Facility to buy back OHM every day. And the investors who understand Olympus well and continue to stay invested would still be using Cooler loans and convertible deposits, which are both generating yield to fund more OHM buybacks with.
Eventually, the above actions would stabilize the market as rational investors see that OHM is working as it has in the past, and that Olympus is pushing backing per token and price higher with its own internal mechanisms. This would bring in new investors who would buy based on this future expectation, which would push price up and eventually to 100%+ premium again to where Emissions Manager would get turned on.
If OHM somehow remained below backing for a long period of time due to extreme negative market sentiment, Olympus can literally buy back every token outstanding with its treasury and still have money left over. The last holder would profit handsomely. But obviously that wouldn’t happen because all of this is public information, and even in extreme bear markets there are still rational investors who would want this free money.
Realistically, there would be plenty of long-term holders who would not sell (like myself). And when the remaining supply was whittled down to only those investors, there would be no more sellers, and then the mechanisms would naturally push price and backing per token higher, and on and on.
Another legitimate concern is a major hack that drains the treasury and/or kills the protocol in another way. In the craziness of 2021, Olympus was the face of DeFi. Everyone in crypto—and even people outside of crypto—knew about it. Its market cap peaked at over $4 billion. I have no doubt many, many bad actors tried to hack it.
Olympus runs on Ethereum, which is extremely secure, and the Olympus team has taken security very seriously since day 1. Olympus has advertised some of the most generous bug bounty offers in all of crypto for years, offering up to $3.3 million if white hat hackers discover vulnerabilities in OHM. Since launch, Olympus has paid $260k in bug bounties found from white hat hackers.
Finally, there is no shortage of crypto projects that have been rugged from their founders. Unfortunately, the bad parts of crypto often overshadow the good parts, and thus even the legitimate projects are viewed with significant skepticism. Nonetheless, I don’t worry about getting rugged at all with Olympus.
I have been invested for almost four years and have studied the two co-founders for dozens of hours (reading and listening to everything they put out) and they have proven to be very honest and upfront—even during the 170x rise and subsequent 95% fall. You learn a lot about entrepreneurs and cultures during those times (lots of similarities to Carvana!). Olympus in general and the co-founders specifically passed with flying colors. Olympus rose over 100x within six months of launching back in 2021. If they wanted to rug, they would have already. Instead, they kept working and releasing new features and building new partnerships through a 95% collapse.
In summary, I believe Olympus has an incredible team and culture and they have created a very unique financial asset. Since November 2022, OHM has proven its purchasing power and price predictability. Olympus will soon turn on convertible deposits and upgrade to Cooler loans version 2, both of which will continue to improve OHM.
I am not sure what the future looks like for OHM, but I think a financial asset that is backed by ~50% liquid cash with an ecosystem in place to ensure long-term purchasing power and price predictability can be significantly larger than a $400 million dollar market cap. Given liquid backing, I view the downside risk at -50%. Multiples of upside vs -50% downside is a bet I am happy to take.
Travis Wiedower 