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What is Olympus v2 (OHM)?
Quick Facts
- Blockchain: Ethereum
- Token: OHM — the core asset of the Olympus protocol
- Category: Decentralized reserve currency / DeFi
- Launched: 2021 by OlympusDAO
- Key mechanic: Protocol Owned Liquidity (POL) and treasury backing
- Governance: OHM/gOHM stakers vote on protocol proposals
- V2 migration: Completed December 2021 with bonding and staking upgrades
Introduction
Olympus v2 is the upgraded iteration of the OlympusDAO protocol — a decentralized financial system built on Ethereum. At the heart of the protocol sits OHM, a treasury-backed token designed to act as programmable monetary infrastructure for DeFi.
Unlike stablecoins or network assets like ETH, OHM is a free-floating reserve currency backed by productive on-chain assets held in a protocol-controlled treasury.
History & Background
The Olympus protocol launched in May 2021, pioneering the concept of Protocol Owned Liquidity (POL) — the idea that a protocol, rather than mercenary liquidity providers, should own and control its own liquidity.
In late 2021, OlympusDAO announced and completed the V2 migration, introducing major upgrades to bonding and staking mechanics. The protocol has continued to evolve its on-chain policy tools since then.
How Olympus v2 Works
Olympus operates through three core layers:
- Treasury — backed by a diversified basket of productive on-chain assets.
- Policy Engine — algorithmically manages OHM supply through mechanisms like Range Bound Stability (RBS), which deploys reserves in downward markets and sells OHM in upward markets to maintain equilibrium.
- Governance — decisions are made on-chain by gOHM token holders.
Key tools in the ecosystem include Cooler Loans (borrow against OHM at a fixed 0.5% rate with no price-based liquidations), Convertible Deposits (CDs), and the Yield Repurchase Facility (YRF).
The bonding mechanism allows users to trade assets for OHM at a discount, helping the protocol accumulate treasury assets and own its liquidity.
Tokenomics
OHM's economic design centers on treasury backing — each token is supported by on-chain assets managed by the protocol. This creates a backing floor that informs supply policy.
In V2, bond payouts are automatically staked at the time of purchase, meaning bonders earn staking rewards throughout the vesting period. Staking OHM yields gOHM (governance OHM), which also grants voting rights in the DAO.
The protocol's policy engine algorithmically expands or contracts supply based on market conditions, aiming for long-run stability.
|
Circulating Supply
| 14.92 million OHM |
|---|---|
| |
|
Total supply
| 19.82 million OHM |
|
Max supply
| -- OHM |
Ecosystem & Use Cases
OHM serves multiple roles within DeFi:
- Unit of account paired against decentralized assets
- Collateral deposited into protocol treasuries
- Borrowing via Cooler Loans against liquid reserves
- Liquidity — OHM can be bought, sold, or borrowed even in volatile conditions
Team, Governance & Community
OlympusDAO was founded pseudonymously and is governed by its community of OHM and gOHM holders. gOHM stakers participate in on-chain governance, voting on policy proposals and treasury decisions.
The Olympus Grants Program (OGP) funds ecosystem initiatives spanning partnerships, incubation, and community development.
Advantages
- Treasury-backed floor provides a fundamental value reference for OHM
- Protocol Owned Liquidity reduces dependence on external liquidity providers
- Cooler Loans offer fixed-rate borrowing with no price-based liquidations
- Algorithmic policy engine manages supply without human bias
- gOHM staking combines yield with governance participation
Risks & Challenges
- Reputation overhang from the 2021 hype cycle, when critics labeled early mechanics as unsustainable
- Complexity of multi-layered monetary mechanisms may deter mainstream adoption
- Treasury asset risk — backing value depends on the quality of held assets
- Holder base concentration and engagement remain ongoing considerations
Long-Term Vision
Olympus aims to become a programmable central bank without human bias — a self-sustaining monetary system governed entirely on-chain. The long-term goal is for OHM to serve as a trusted, policy-controlled reserve currency and collateral layer across the broader DeFi ecosystem, continuously refined through decentralized governance.
Frequently Asked Questions
- What is OHM used for?
OHM is the core token of the Olympus protocol, used as a treasury-backed unit of account, DeFi collateral, and a base asset for borrowing via Cooler Loans. It can be bought, sold, or borrowed against even in volatile market conditions.
- What is Protocol Owned Liquidity (POL)?
POL means the Olympus protocol itself owns and controls its liquidity rather than relying on external providers. OlympusDAO pioneered this concept, ensuring more stable and self-sustaining liquidity for OHM.
- What changed in Olympus V2?
Olympus V2, migrated in December 2021, upgraded the bonding and staking mechanics so that bond payouts are automatically staked at purchase, earning staking rewards throughout the vesting period. It also refined governance and introduced additional policy tools.
- What is bonding in OlympusDAO?
Bonding lets users trade assets such as stablecoins or LP tokens to the protocol in exchange for OHM at a discounted price. This helps the protocol grow its treasury and accumulate its own liquidity.
- What is gOHM?
gOHM (governance OHM) is received when users stake OHM in the protocol. It represents staked value and grants holders voting rights over Olympus DAO proposals and treasury policy decisions.
- What are Cooler Loans?
Cooler Loans allow OHM holders to borrow against the liquid reserves backing OHM at a fixed 0.5% interest rate. There are no price-based liquidations, making it a more predictable borrowing experience.
- How does Range Bound Stability (RBS) work?
RBS is an algorithmic policy mechanism that deploys treasury reserves to buy OHM when prices trend lower, and sells OHM for reserves when prices trend higher. This helps maintain equilibrium around the treasury-backed value.
- Is OlympusDAO decentralized?
Yes, OlympusDAO is governed by its community through on-chain voting using gOHM tokens. The protocol was founded pseudonymously and all key policy decisions are subject to DAO approval.