Olympus DAO is a ponzi scheme and deserves no place in crypto
Sorry, but this is the harsh truth.
Many of you have already heard about Olympus DAO or seen the “(3,3)” on Twitter. Do you know what that means? If not, then I will explain its meaning and how it affects you later on in this article.
I am going to spend little time explaining what Olympus DAO is and focus more on its ponzinomics, because that’s what it is, a ponzi scheme, a pyramid. The structure of this article is a series of rapid fire questions aimed at instilling sufficient doubt in the reader.
- Olympus DAO has a higher yield than Bitconnect. Do you remember the “hey hey hey wassa wassa” guy? Do you remember how everything ended?
2. According to the official website the purpose of OHM is to be a currency able to constantly grow its purchasing power, yet which other trading pair can you find listed against OHM? None. No reputable exchange list, they all have SHIBA but no OHM, wonder why?
3. All liquidity is bribed by “bonding”, this is the perfect window dressing for tricking new entrants. Basically you can buy OHM at discount (“Such a good deal, I’m buying something worth 100$ for only 90$, I’m the smartest”) but they will be locked for some time. So most of the new users enter via bonding, but what about the exit liquidity? What if you want to sell? There are only a few millions $ on the bid for $4B market cap behemoth. The exit door looks very small.
4. You probably saw this meme around on Crypto Twitter -> (3,3). It refers to the alleged game theory that the optimal equilibrium for OMH-ies is for everybody to stake and nobody to sell. In my humble opinion this is just some pseudo-scientific jargon as part of their marketing tricks. The only rational decision for a ponzi scheme “investor” is to be the first in, milk it and get out.
5. Olymus Dao as a one-sided market with no selling pressure. As of today OHM is a very closed ecosystem with very little price discovery. There are no ways to short OHM in size hence the market is not balanced. I have tried Float Capital platform (which btw seems very promising!) to open a short position but there is very little liquidity (circa $1M), I believe using Matic as network and DAI as currency is limiting their potential user-base.
6. Team. Who’s the team behind Olympus DAO? I’ve spent some time searching for them but had no luck. Maybe you can help?
Conclusion
So is Olympus DAO a ponzi scheme with zero value? Yes, it’s a ponzi but no, it might have some value as the treasury has a significant amount of capital inside.
OHM should trade in line with the value of the treasury divided by the circulating supply of tokens, there’s space for a small premium as some assets are producing yield but definitely not 5–6X premium
The inflation rate of OHM is high (hint: it’s the APY because your reward are in OHM) so in the formula above the numerator is growing at say 10–20% per annum, while the denominator at 7–8000% per annum, this adds additional selling pressure as the supply is growing much faster than demand.
Were you able to invest in Olympus DAO when the market cap was inline with the Treasury? Well done! You definitely made $$$ as you were among the early members of the pyramid. Did you purchase OHM recently hoping to become rich? Good luck with that.
