Decentralized finance, or DeFi, projects have revolutionized the way investors approach their financial endeavors. One of the most interesting projects in the space is OlympusDAO. The protocol was designed to introduce a new, more sustainable model for decentralized currencies, combining the stability and reliability of traditional finance with the transparency and speed of blockchain technology.
OlympusDAO’s OHM token is backed by a reserve treasury that includes both stablecoins and volatile assets, such as ethereum, which improve the fundamental value of the token. On Friday, the Olympus treasury team, led by Relwyn, announced changes to the treasury framework to allocate a larger percentage of its holdings to volatile assets like ethereum, following nearly unanimous approval from community members.
The protocol currently holds $200 million in its reserve treasury, comprising a 79%-21% breakdown of stablecoins, volatile assets, and protocol-owned liquidity. The changes will see the proportion of holdings shift to a 75%-25%, giving Olympus more exposure to volatile assets, specifically ether. The shift is expected to bring OHM closer to its yin-yang approach, a modeled balance between the stability of the reserve and exposure to volatility, and improve the long-term sustainability of the protocol.
The vote for the new Treasury Framework attracted 76 wallets that held 23,000 OHM tokens, which nearly all agreed on the proposal. The Treasury team decided to change the allocations to cater to the bullishness of community members, as they believe more exposure to volatile assets will benefit the protocol in the long run. However, they also cautioned the community against overly exposing the protocol to minimal risk.
OlympusDAO is a project that aims to create a new financial paradigm that is designed to be more inclusive, sustainable, and equitable than the current systems that exist. It works with a unique approach, combining both stablecoins and volatile assets to create a hybrid token that has both the price stability and liquidity of a stablecoin, and the growth and yield potential of a volatile asset.
With the ever-changing financial landscape, protocols like OlympusDAO provide a robust and self-sustaining model that can adapt to market conditions, keeping the balance between price stability and exposure to volatility.
One major advantage of OlympusDAO’s approach is that it provides a built-in mechanism for market stabilization, since the treasury’s volatile assets serve as a buffer against inflation.
As a result of the changes to the treasury framework, the Olympus protocol will experience reduced reliance on stablecoins with centralized backing, such as DAI. These tokens faced problems during the banking crisis in March, highlighting the danger of centralized backing.
The changes to the treasury framework will ultimately encourage more users to participate in the protocol. Increased exposure to volatile assets will provide better returns for investors while leveraging its advantages, such as improved liquidity and transparency through blockchain technology.
The Treasury team’s work aligns with the vision of the pseudonymous investor BowTiedBull, who seeks to explore BowTied Jungle, where citizens exchange advice on investing and job-seeking. Together with the community, the team is continually innovating to enhance the protocol’s fundamental value, creating an inclusive and dynamic protocol that is more sustainable and equitable for all.
In conclusion, DeFi protocols are changing the financial landscape and offer a more inclusive financial paradigm. Projects like Olympus represent the next phase of DeFi innovations, combining price stability and exposure to volatility, decentralization, and self-sustainability. With the shift in the treasury framework, OlympusDAO is positioning itself as a more robust protocol designed to adapt to market conditions, providing investors with better returns while remaining true to its goal of being an inclusive and equitable protocol.