DeFi Projects Are Getting Interested In OlympusDAO And Here’s Why

DeFi projects are getting interested in OlympusDao and its OHM stablecoin because of its bonding mechanism and not the staking as we can see more in today’s crypto latest news.

In a Senate hearing on stablecoins over the past week, one name came up much more than anyone else in the crypto space expected. OlympusDAO and its OHM stablecoin were the main topics. The OHM stablecoin is unlike other stablecoins as it is not pegged to a fiat currency. The price declined sharply recently but it didn’t stop the DeFi projects from partnering with OlympusDAO because they want to use its white-label liquidity solution dubbed OlympusPro. In a nutshell, the DeFi projects were suffering from mercenary yield farmers and they are often large bag holders that can swoop in on projects with the token-incentive scheme going.
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The Senate Review referring to $OHM and @OlympusDAO as an "algorithmic stablecoin" today just tells you how well they understand crypto.

— Showtime2kX (@Showtime2kX) December 14, 2021

The leading Defi blue-chip project added token rewards for the next few weeks and but small and unknown decentralized exchanges on Boba are doing something similar. The size of the project is seemingly not important but it’s just the size of the APY. While this can create a huge spike in the project’s total value locked, it rarely lasts long so as soon as the reward scheme ends, these farmers are withdrawing their liquidity and selling their tokens, and moving in on the search for a new opportunity.

Nansen, as a blockchain analytics platform, revealed that a stunning 42% of the yield farmers that enter a farm on the day it launches exit in the 24 hours so around 16% leave in the next 48 hours, and by the third day, 70% of the users will have withdrawn from the contract. This happens often and leaves the project’s true believers holding nothing. Fixing this arrangement is the promise of the Defi 2.0 projects like OlympusDAO and its bonding function.

Olympus bonds are similar to traditional bonds as they offer a way to purchase discounted OHM tokens by swapping a handful of cryptocurrencies or liquidity provision tokens from exchanges like SushiSwap. The OHM is distributed regularly to the bondholders until it reaches maturity at 15 epochs with one equaling 8 hours. If for example, the OHM costs $500 on the open market, the users can purchase the same token for $450 and the wait time keeps folks locked into the protocols much longer than the figures Nansen cites regarding the yield farmers. Because OHM is cheaper as a bond, the DeFi projects are getting interested in OlympusDao.