Thread by @RhettShipp

1/ Apologies for the excessively long thread but here are some high level thoughts about "kinds of money" and how it applies to $ETH $BTC and $OHM

2/ At a high level, I think historical currencies can be looked at as:

1- Commodity currencies
2- Reserve backed currencies
3 - Non-reserve currencies

3/ Commodity currencies: Gold, for example. It was useful for things other than money, but it had some nice properties (durable, divisible, transportable) that caused people to start using it as a money in addition to its other uses.

4/ Gold didn't need to be money to be valuable, but being money made it more valuable (monetary premium)

5/ Reserve backed currencies: The dollar before it left the gold standard, for example. If each dollar is backed by one ounce of gold, for ex, it gives a minimum value to the dollar since if it ever fell below that, people could just exchange their dollars for gold at a profit.

6/ But the value of the dollar can go much higher than that, so you could think of the value of gold backed dollars as the value of the gold + network effects which create demand for dollars.

7/ The gold backing also constrains monetary policy. This can be thought of as good or bad. It prevents inflationary printing, which many think is good, but it also prevents responses that some think help combat recessions.

8/ Gold backing could also incentivize conflict - If the US needs to expand the money supply but doesn't have more gold, maybe it just invades another country to take their gold.

9/ Non-reserve currencies: The dollar now. The value of the dollar now comes entirely from the network effects that create demand for dollars rather than having reserves backstop the value.

10/ It also leaves monetary policy less constrained. Pro and con here too - pro: may be able to combat recessions, con: you may debase your currency through short sighted monetary policy.

11/ In the crypto space, there are a few notable experiments in creating a new, better money. #Bitcoin, #Ethereum, and @OlympusDAO

12/ Bitcoin, I see as a better version of 3 (non-reserve currency). It doesn't have reserves backing it. It doesn't have usefulness outside of being money. But its monetary policy is rules based and non-inflationary.

13/ $BTC derives its value from network effects, but the monetary policy means it is likely to be a better store of value than dollars.

14/ Ethereum, I see more similar to 1 (commodity money). Even if ETH never was "used as money" it derives a lot of value from being the asset securing the Ethereum smart contract platform.

15/ As that ecosystem grows, the value of $ETH grows. If ETH is adopted as money on top of that, then there is even more value in it as it gains a monetary premium. But its value is not dependent on that.

16/ Olympus is a decentralized version of 2 (reserve currency). Olympus has created a genius system to pull assets (right now mostly stable coins and ETH) into its treasury.

17/ Those reserves provide a minimum value to $OHM (like gold did for dollars in the past), and additional value comes from network effects and a few other things like control premium as DeFi assets accrue.

18/ Additionally, if Olympus manages the treasury wisely, it can deploy those assets into DeFi and earn yield thus growing the reserves backing the value of $OHM.

19/ It also creates a virtuous cycle for each asset it pulls into the treasury.

Ex: if Olympus becomes a black hole for ETH (huge amounts of ETH entering the treasury and none ever leaving) it puts upward pressure on the ETH price which then increases the value of the treasury.

20/ Soon Olympus will add Bitcoin to its treasury, creating that same virtuous cycle with Bitcoin.
As Olympus grows in adoption, I could see it potentially becoming a black hole for all of the most valuable assets in the world.

21/ First ETH, then BTC, then the other most valuable crypto assets. Then it could bridge to traditional assets and do the same for gold, then equities, then real estate holdings etc.

22/ In that extreme future scenario, OHM as a decentralized and diversified reserve currency could become the dominant global currency.