🔍 Core Components
1. Bonding: Protocol‑Owned Liquidity (POL)
- What it is: You deposit assets like DAI, FRAX, ETH, or LP tokens into OlympusDAO and receive newly minted OHM at a discount, subject to a vesting period (typically 5 days)
- Why it matters: Olympus accumulates treasury assets and liquidity ownership instead of relying on external participants. As one Reddit user put it
> “Bonding… not only creates more trading pairs … but also owns that liquidity.”
Mechanics: Bond price is calculated using the debt ratio and a Bond Control Variable (BCV). High demand reduces discounts, and vice versa .
2. Treasury Backing & Floor Price
- Every OHM token is backed by at least 1 DAI worth of real assets in the treasury — known as *risk-free value (RFV)
- If OHM trades below 1 DAI, the protocol can buy it back and burn tokens until it stabilizes at or above that floor
3. Staking: sOHM & Rebases
- Holder stakes OHM to receive sOHM on a 1:1 basis. The staking contract issues rebases every ~8 hours (an epoch), increasing your sOHM supply automatically and compounding over time
- These rewards come from protocol profits — mainly bond premiums and LP fees — and are distributed among stakers
- Auto‑compounding happens with no need to claim or re‑stake manually, saving gas fees
🧠 How It All Fits Together
Olympus operates as a cycle that merges bonding and staking into a self-reinforcing loop:
1. Bonders supply assets → treasury grows → OHM is minted and partially reserved.
2. Treasury revenue comes from LP fees and bond premiums.
3. Stakers are rewarded via rebases for locking up OHM (reducing circulating supply).
4. A portion of each bond's minted OHM goes to the DAO or protocol multisig as profit .
5. High APR attracts more staking and bonding — dubbed the “(3,3)” game theory meme: best if everyone bonds and stakes .
This results in protocol‑owned liquidity, a backed supply, and incentivized staking, creating a closed-loop model backed by real assets rather than external farming incentives
⚠️ Risks & Sustainability
OHM’s high APY is inflationary — the protocol continually mints OHM to pay stakers and bonders. Without matching treasury growth, RFV can erode, diluting backing per OHM.
Discontent around sustainability: some critics call it unsustainable at high valuations or label it a transient yield scheme
