The term DeFi is a combination of two words: Decentralization and Finance. In essence, DeFi is a mechanism for providing financial items on a decentralized and open blockchain network to the public. Thus, instead of going through intermediaries, like brokers or banks, anyone can access and use DeFi. Furthermore, there is no need for official identification documents, which makes it even more accessible.
While the practical implications of DeFi 2.0 are now evolving, a key component of this future generation of DeFi is the inclusion of alternatives to what was previously defined as the mainstay of DeFi 1.0. : liquidity mining.
OlympusDAO leads the DeFi 2.0 wave and is a project that is exploring new, innovative means to acquire users, establish a consumer base, and figure out how to ensure these users continue to use it. communication.
What is Olympus DAO?
With OHM as the native token, Olympus is a decentralized autonomous organization (DAO). To avoid any drop in price, OHM is backed by a mix of crypto assets in the Olympus Treasury, including FRAX and DAI.
OHM holders have the right to vote on the future destiny of the Olympus DAO system, thereby building a community-led and community-driven financial platform to ensure transparency and stability.
Olympus hopes to become a worldwide unit of commerce and a means of real-world currency exchange at some point in the future.
How do users make money through Olympus DAO?
Users on Olympus DAO can choose between two basic techniques for making profits: staking and linking. Both of these methods are associated with the OHM token, further expanding its use.
Strike
Staking is a long-term approach where users are rewarded for staking a certain amount of OHM tokens on the Olympus platform. With a higher overall bet comes a higher reward, users are rewarded based on the number of OHM tokens they bet.
Furthermore, users are rewarded with sOHM, which can be leveraged on different DeFi protocols. To receive OHM from sOHM, all a user has to do is burn their sOHM token.
Bonding (Link)
Selling bonds offers OHM as reward. Bonds are an approach to short-term returns, allowing Olympus to own the reserve and liquid assets that have been entrusted to it. Bondholders offer their LP tokens (liquidity provider tokens) or crypto assets (e.g. LUSD, DAI, wETH and/or FRAX) to receive discounted OHM tokens .
Selling bonds generates profits for the Olympus Treasury, allowing them to accumulate their own liquidity. The Olympus system provides users with a DAI link, WETH link, FRAX link, OHM-FRAX LP link, and OHM-DAI LP link. Users can strategically choose a bond based on its ROI (return on investment) percentage.
The only other way to get OHM, other than directly earning through staking and/or affiliate, is to buy it. Users can buy OHM on DeFi exchanges, such as Gate.io, Uniswap and SushiSwap, etc.
DeFi 1.0's Existences
DeFi 1.0 is based on liquidity mining. In simple terms, liquidity mining is a mechanism by which platforms reward users with their own native tokens in return for sending resources which some other users can trade or borrow.
The problem is that these protocols are diluting their token supply in return for capital contributions, which are often impermanent. So what will happen is individuals join, commit their resources to the protocol, gain its benefits, then withdraw both their resources and rewards, selling native tokens on market.
There are many cases where this conundrum is playing out. According to DeBank, one such case is that of an initiative called Big Data Protocol, which raked in about $6 billion in total value locked during the six-day period of liquidity mining incentives. , only to crash to the current level of $3.1 million.
However, liquidity mining operations are not always short-lived and short-lived. Compound Finance's COMP coin has maintained continuous and long-term liquidity mining.
Despite the long run, liquidity mining is a risky strategy to use in DeFi. It reduces the supply of a project and sucks money from greedy users, as evidenced by the Big Data Protocol initiative.
Why did Olympus DAO introduce DeFi 2.0?
Several new projects are abandoning liquidity mining (used largely in DeFi 1.0) in favor of exploring new alternatives. Olympus DAO is introducing DeFi 2.0 to overcome the shortcomings of DeFi 1.0.
The staking and linking mechanisms have allowed Olympus to become its own liquidity holder, which is a significant difference from many (but not all) DeFi 1.0 projects that saw liquidity. reduction when the rewards are distributed to farmers.
According to DAO statistics on their website, the protocol owns more than 99% of the liquidity of OHM-DAI bonds. The platform is pretty confident that liquidity won't go away as it is owned by none other than Olympus. On top of that, they even get LP fees!
Olympus DAO Forks
Forks refer to tweaked versions of a given project's codebase. Given the success of the protocol-owned Olympus DAO liquidity model and its subsequent catalysis of the DeFi 2.0 movement, it's no surprise that the Olympus DAO forks were born.
The most popular Olympus DAO forks right now are Wonderland, Hunny DAO, and Klima DAO.
Wonderland (TIME)
Wonderland (TIME) is the first decentralized reserve currency protocol that allows users to earn compound interest through staking. According to their website, as of December 6, 2021, Wonderland's APY is around 78,442.3%.
Hunny DAO
Hunny DAO (LOVE) is a fork of OlympusDAO by Hunny Finance that promises long-term scarcity and price consistency. According to their website, as of December 6, 2021, Hunny DAO's APY is almost 3,727,368.7%.
Climate DAO
Klima DAO (KLIMA) aims to accelerate the price inflation of carbon commodities so that businesses and governments are encouraged to more timely adjust to the global warming reality, thereby inventing technology to reduce the amount of carbon dioxide. carbon emissions.
There are also many other upcoming forks of OHM, including but not limited to Venom DAO, TaiChi DAO, Snowbank, Spartacus, Temple DAO, OtterClam, Exodia and others.
Conclude
DeFi 2.0 claims to be a solution to the shortcomings of DeFi 1.0. Although they both have the same goal, their protocols matter a lot in terms of their longevity. Despite that, decentralized finance is arguably a good concept, especially for consumers, but whether DeFi 2.0 will continue to soar only time will tell.
