Staked Olympus: The Decentralized Reserve Currency for Web3

What is Staked Olympus

Friends, today let’s talk about a blockchain project called Staked Olympus, abbreviated as SOHM. However, to understand SOHM, we first need to start with its “home base”—Olympus DAO. You can think of Olympus DAO as a decentralized “digital central bank” or “community bank”; it doesn’t belong to any country or company, but is managed collectively by community members.

So, what exactly is SOHM? It’s not an independent project, but rather a “deposit certificate” or “receipt” you receive after staking the native token OHM (which you can think of as the currency issued by this “digital central bank”) in Olympus DAO. Just like depositing money in a bank and getting a deposit slip, SOHM is your proof of staked OHM. This certificate automatically “earns interest” over time, meaning your SOHM balance will increase, as it represents both your staked OHM and the rewards those OHM have generated.

So, simply put, Staked Olympus (SOHM) is the “deposit certificate” you receive by staking OHM tokens in Olympus DAO, which automatically grows over time.

Project Vision and Value Proposition

Olympus DAO has an ambitious vision: it aims to create a new, decentralized “reserve currency” for the crypto world. What does reserve currency mean? Just like the US dollar in the real world, which many countries hold as reserves because it’s relatively stable and widely accepted. Olympus DAO wants its OHM token to become the “digital dollar” of the Web3 world (the decentralized internet), but it doesn’t want to peg directly to the US dollar like traditional stablecoins, because it believes the dollar is controlled by centralized governments and faces issues like inflation.

The core problem Olympus DAO hopes to solve is: how to create a “smart currency” in a decentralized world that maintains relatively stable purchasing power and resists censorship, without relying on any centralized institution. Its value proposition is to support OHM’s value through a protocol-controlled “treasury,” rather than simply pegging to a fiat currency. This treasury holds various crypto assets, such as stablecoins DAI, FRAX, etc. As a result, OHM has intrinsic value support, and theoretically its price shouldn’t fall below the asset value corresponding to each OHM in the treasury.

Unlike similar projects (such as traditional stablecoins), Olympus DAO doesn’t pursue strict 1:1 pegging, but hopes OHM can be a “freely floating” currency with intrinsic value support. It uses economic mechanisms to maintain relative price stability and predictability, while still allowing for some volatility.

Technical Features

The core technical features of Olympus DAO are mainly reflected in its unique economic mechanisms, which operate like a sophisticated financial machine through two main methods:

1. Staking

This is how you obtain SOHM. When you stake OHM tokens in the Olympus DAO protocol, you receive an equal amount of SOHM. The protocol periodically (e.g., every 8 hours) automatically increases your SOHM balance based on the current reward rate. This automatic increase is called “rebase,” allowing your SOHM balance to compound like a snowball. The OHM rewards come from the protocol’s “minting” and “bond sales” revenue.

2. Bonding

This is the main way Olympus DAO accumulates its treasury assets. The protocol offers users the opportunity to buy OHM tokens at a discount, but the condition is that users must provide other crypto assets (such as stablecoins DAI, FRAX, or liquidity pool tokens LP) to the protocol. This way, the protocol can “own its own liquidity” (Protocol Owned Liquidity, POL) and reserve assets, rather than relying on external liquidity providers. It’s similar to a country issuing government bonds to raise funds, except here the protocol issues OHM to acquire the reserve assets it needs.

The entire protocol runs on the Ethereum blockchain, meaning its operations are open and transparent, and automatically executed by smart contracts.

Tokenomics

Basic Token Information

• Token Symbol: OHM is the native token, SOHM is the staked OHM certificate.
• Issuing Chain: Both OHM and SOHM are Ethereum ERC-20 standard tokens.
• Total Supply or Issuance Mechanism: OHM does not have a fixed maximum supply. Its supply is dynamic, increased through the protocol’s minting mechanism, mainly for rewarding stakers and through bond sales.

Inflation/Burn

When the price of OHM is above its intrinsic value, the protocol mints new OHM and sells it, increasing supply to lower the price. When the price of OHM is below its intrinsic value, the protocol uses treasury assets to buy back and burn OHM, reducing supply to raise the price. This mechanism aims to maintain OHM’s “freely floating stability.”

Token Utility

• OHM: Mainly used for staking to obtain SOHM and rewards, and for participating in the bonding mechanism.
• SOHM: As the certificate for staked OHM, its quantity automatically increases, representing the staker’s share and earnings in the protocol. SOHM is transferable and can be used in combination with other DeFi protocols.
• gOHM: (Governance OHM) is the wrapped version of SOHM, mainly used for protocol governance voting and can circulate across different blockchains.

Token Distribution and Unlock Information

OHM rewards are mainly distributed to SOHM holders through the staking mechanism, with the reward rate changing according to the protocol’s monetary policy and staking volume. The bonding mechanism allows the protocol to sell OHM at a discount to acquire treasury assets; these OHM usually have a certain vesting period.

Team, Governance, and Funding

Team

Olympus DAO was initially created by an anonymous team (the founder’s codename is “Zeus”). As the project developed, it gradually evolved into a community-driven decentralized autonomous organization.

Governance

Olympus DAO is a typical decentralized autonomous organization (DAO). This means major project decisions, such as protocol upgrades, treasury asset management, and monetary policy adjustments, are decided by OHM token holders (especially gOHM holders) through voting. This model aims for transparency and decentralization, allowing community members to jointly participate in the project’s future development.

Treasury and Funding Runway

The core of Olympus DAO is its powerful “treasury,” also known as “Protocol Controlled Value” (PCV). This treasury holds a large amount of crypto assets, such as stablecoins DAI, FRAX, and various liquidity pool tokens. These assets provide intrinsic value support for OHM, ensuring each OHM has asset backing. The size and diversity of the treasury are important indicators of protocol health, providing the ability to withstand market volatility and long-term operational funding (runway).

Roadmap

Olympus DAO’s roadmap focuses on realizing its vision as the Web3 decentralized reserve currency. While specific annual plans may be updated, its core direction is:

• Early Stage: Focus on accumulating treasury assets through staking and bonding mechanisms, expanding OHM supply and market influence.
• Mid-term Goals: Gradually achieve “progressive decentralization,” reducing reliance on manual intervention and allowing the protocol to run more automatically via smart contracts.
• Long-term Vision: Become the core reserve currency of the Web3 ecosystem, providing stable, neutral value storage and exchange medium for various decentralized applications.

For example, in 2022, Olympus DAO proposed the “Olympus12 Action Plan” to promote OHM automation and minimal governance. Overall, the project is committed to continuously optimizing its economic model and governance structure to enhance OHM’s stability and utility.

Common Risk Reminders

Any blockchain project comes with risks, and Staked Olympus (SOHM) and Olympus DAO are no exception. Here are some common risks to be aware of:

1. Economic Risks

• Sustainability of High APY: Olympus DAO initially attracted attention with its extremely high annual percentage yield (APY). However, such high APY is usually maintained by minting large amounts of new OHM, which may lead to OHM inflation and dilute the value of each OHM. Historical data shows APY can fluctuate greatly and may drop rapidly over time.
• Price Volatility: Although OHM is backed by treasury assets, it is not a strict stablecoin; its price is still affected by market supply and demand, overall crypto market sentiment, and protocol mechanism adjustments, resulting in significant volatility. Investors may face the risk of OHM price declines.
• Treasury Asset Risk: Assets held in the treasury may also face market volatility risk; if the value of treasury assets shrinks significantly, it may affect OHM’s intrinsic value support.

2. Technical and Security Risks

• Smart Contract Vulnerabilities: Olympus DAO’s core mechanisms are controlled by smart contract code. If there are undiscovered vulnerabilities, it could lead to asset loss or protocol attacks.
• Cross-chain Risks: If the wrapped version of SOHM (such as gOHM) involves cross-chain operations, the security and stability of cross-chain bridges may introduce additional risks.

3. Compliance and Operational Risks

• Regulatory Uncertainty: Global regulatory policies for cryptocurrencies and DeFi projects are still evolving; future policy changes may impact Olympus DAO’s operations and development.
• Governance Risks: Although DAOs aim for decentralization, if governance mechanisms are imperfect or have loopholes, there may still be issues such as minority control of majority voting power or low decision-making efficiency.

Please remember, the above risks are not exhaustive; you should always conduct thorough personal research and risk assessment before participating in any crypto project.

Verification Checklist

When researching a project in depth, here are some key pieces of information you can verify yourself:

• Block Explorer Contract Address: Confirm the ERC-20 contract addresses for OHM and SOHM on the Ethereum block explorer (such as Etherscan) to verify the authenticity of the tokens and their on-chain activity. For example, the old contract address for SOHM V2 is
  0x04f2...111f
  .
• GitHub Activity: Check Olympus DAO’s official GitHub repository (e.g.,
  OlympusDAO-Education/Documentation
  ) to see code update frequency, developer community activity, and documentation completeness.
• Official Documentation/Whitepaper: Carefully read Olympus DAO’s official documentation and whitepaper, which are the most authoritative sources for understanding project design principles, economic models, and future plans.
• Audit Reports: Look for third-party security audit reports of the project’s smart contracts to understand their security assessment results.
• Community Activity: Follow the project’s official forum, Discord, Twitter, and other social media platforms to gauge the level of community discussion and team-community interaction.

Project Summary

Staked Olympus (SOHM) is a core component of the Olympus DAO protocol, representing the automatically compounding equity certificate users receive after staking OHM tokens. Olympus DAO, as a decentralized “digital central bank,” has the grand goal of creating a Web3 reserve currency (OHM) that does not rely on any fiat currency and is backed by protocol treasury assets. Through its unique “staking” and “bonding” economic mechanisms, it incentivizes users to hold OHM and earn rewards, while continuously accumulating and managing treasury assets to provide intrinsic value support and relative price stability for OHM.

This project introduces an innovative monetary experiment in the crypto world, aiming to solve the centralization and fiat inflation issues of traditional stablecoins. However, like all emerging blockchain projects, it comes with risks such as sustainability of high APY, token price volatility, smart contract security, and regulatory uncertainty. For anyone interested in SOHM or Olympus DAO, it is strongly recommended to conduct in-depth independent research and fully understand its potential risks and opportunities. Please remember, this is not investment advice.