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OlympusDAO's OHM Token Tanks 30% Amid Profit-Taking, Liquidations

The niche DeFi project OlympusDAO continued its downtrend early Monday morning after a bout of profit-taking and cascading liquidations. 

3 min read
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OlympusDAO's "decentralized reserve currency," OHM, has fallen by 30.4% this morning. This places the niche crypto token at $131.19 a pop, according to data from CoinGecko

Since New Year's day, the token has fallen a total of 65% amid the broader crypto market's bearish start to 2022. 

The token has slipped more than 90% since its all-time high of $1,415 in April 2021. 

Since its inception last year, the OHM token has made waves in the crypto community. This interest has been primarily driven by the OlympusDAO's unique design, dubbed "ponzinomics" by many, as well as the platform's staking rewards. 

According to Asia-based crypto reporter Colin Wu, shortly before the latest downturn, these staking rewards reportedly offered users as much as 190,000%. Now, the rewards are 3,720%.

One of the key reasons behind today's crash allegedly revolves around an influential trader called "el sk" on Twitter taking profits from their significant OHM position.

An Ethereum transaction making the rounds on Twitter ties this trader to the sale of more than $10.5 million worth of OHM for the stablecoin DAI. According to Etherscan, the transaction was executed on the decentralized exchange (DEX) SushiSwap at approximately 9:00 pm EST on Sunday. 

Beyond this one large sale, data pulled from DeFi project Rari shows a cascade of liquidations, most of which are for levered longs on OHM. These liquidations have added significant sell pressure too.

What is OlympusDAO? 

OlympusDAO is a unique crypto experiment in which the token is backed by the value of the project's treasury. This treasury expands alongside the amount of OHM minted and distributed through its staking mechanism mentioned above and OHM bonds

Users can buy discounted OHM tokens, called bonds, in exchange for other cryptocurrencies, including DAI or wrapped Bitcoin, or liquidity provision tokens from other crypto exchanges. 

These bonds mature, realizing their total value, after 15 epochs, where one epoch equals roughly 8 hours. Selling these bonds earns the protocol money, which is then used to mint and distribute more OHM to users staking with OlympusDAO. 

And with such high yields for staking, users who collect more OHM are highly-incentivized to turn around and stake those tokens back with Olympus. 

The design has influenced many other projects, with Olympus even rolling out a white-label bond solution that other projects can use, called OlympusPro.

But while token bonds are all the rage, their traction is doing little for the price of OHM today.

Disclaimer

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

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