Thread by @bork_eth

Ready for "OHM 4 idjits" part 2, fren?

Am truly grateful for all the wonderful words, encouragement, and follows. And I apologize for not responding to every comment. I haven't figured out how to access all the comments tucked in my last big thread.

(@jack pls help) 0/n

If you haven't read part 1, then pls go read that first.

This isn't an episode of Friends, fren.

We stand atop foundations built in part 1. We learned the how. And now we learn the why.

https://twitter.com/bork_eth/status/14574021804162867221/n

1/n

So—where were we?

We covered what @OlympusDAO is, what it's tryna do, and how it works.

2day: we finish how Olympus is pursuing its #goals. And we lurn whether $OHM will make u rich. 2/n

But first, let's do a quick 2FA to make sure ur in the right place (again). Can never be 2 careful with all the skems going around.

This thread ain't for the big brained. 3/n

Some people think ur smart. But truth is you prefer books with more pictures than words. And—like the noble hard boiled egg—you have a smol, smooth brain.

Sound like u?

Welcome, fren.

Let's do the hecc out of a learn today. 4/n

k. so.

Big Olympus APY: 2 raisins.

1. It's a beacon to attract early stakers quickly
2. It's an adjustable tool that allows Olympus to control the playing field (i.e. staking behavior). 5/n

🚨 Beacon 🚨

The APY is a powerful beacon for 2 raisins.
1st: as we touched on in pt 1: dat #thiccness

Have you ever fathomed such returns in tradfi? Vampiric regulator Jerry Jensler gets wet over 8%, what do you think he would do for 8200%?

It's just 2 gud 2 pass up. 6/n

Second, it has yuge mimetic value. The APY is absurd—so absurd it invokes social virality.
Folks are compelled to share it with frens bc:

they need confirmation (is this legit?);
it's shocking;
it ups their own social capital; &
its genuinely helpful info for their frens. 7/n

And it's safe to say that, as a signalling mechanism, the APY is doing/done its job.

Over 64k OHMies stronk now! 8/n

[dune.xyz/shadow/Olympus…] via @sh4dowlegend

Sidebar: Is there such a thing as too big when it comes to APY?

Mebe.

1 @OlympusDAO fork may be proving that in real time.

I was skeptical of Olympus' APY. If the APY is a number that I can't even pronounce in public then that's a no from me dog. 9/n

6 digits was plenty enough for the early crowd. And even a modest 4 digits is enough for tens of thousands more #OHMies.

And this is key to understand, because an attractive APY can inspire a positive feedback loop. 10/n

If the APY is high enough, it means more OHMies. More OHMies, means more buying. More buying, means the price increases. And a higher price means Olympus can offer even danker bond discounts. 11/n

Danker discounts, means more liquidity/reserves. More liquidity/reserves make $OHM less risky and more attractive. Which means more OHMies. And more OHMies means.... 12/n
via @d0mPablo

🍆Adjustable tool🍆

The APY adjusts 2fold: automatically within a smol range and bigly through policy intervention.

The APY does a bit of an automated floaty dance depending on how much $OHM is being staked—moving up or down in response to unstaking or staking respectively 13/n

And sometimes the APY does a heccin kersploosh bc the policy team says so.

This only happens occasionally though. And only based on predetermined circulating supply levels of $OHM. Once met, they lower the APY to slow the amount of new $OHM being created. 14/n

These policy-determined APY kersplooshes are partially how Olympus intends to transition from phase 1 (growth and wealth accumulation) to phase 2 (decentralized reserve currency).

This table shows the 'loose' supply levels that Olympus intends to tweak the APY at. 15/n

The APY started in the low 6 figgies in June, and has since dropped to 4 figgies today.

It's lowering at a rate @OlympusDAO thinks is slow enough to keep old OHMies hooked, and still bring in new OHMies. But eventually retention won't matter as much. 16/n

Via @sh4dowlegend

So far it's attracted 63k OHMies likes flies to a honey-soaked turd. And as the number of OHMies grows, the value of the protocol grows.

(Recall the feedbackloop from 12/n)
17/n

OHMies pay blonkchain bucks (like ETH) for the privilege of holding a token that cost $1 to mint.

And when we stake our $OHM, the protocol mints more $OHM to reward us (which grows the protocol's market cap bc the price of $OHM is propped up by all the OHMies piling in). 18/n

And OHMies aren't going anywhere fast. Because $sOHM is currently performing a Michael Dublé every 2 months.

Quick Update: Since pt1, my $sOHM has nearly amassed 1 more $sOHM. Which is #AwesOHM. 19/n

That's enough on APY for now. Let's chat about the other thinger @OlympusDAO uses to suck value into its hole.
Remember the bonding mechanism we discussed in part 1?

You read part 1. Right, fren?

K

Gunna do u a trust. pls don't break. 20/n

The protocol sells bonds to suck in liquidity and reserve value.

These form the rapidly growing Olympus treasury. At the rate we're going, Olympus could be sitting on the largest treasury in DeFi within 12 months.

For reference, some of the biggest treasuries are👇 21/n

By selling discounted $OHM (which the protocol only needs 1 $DAI to mint) in exchange for liquidity bonds, Olympus has effectively controlled its own liquidity. IE the holy third leg.
Quick POL recap
👉Olympus doesn't have to rent it's liquidity like a pantry harlot.
22/n

👉Buying and selling $OHM is a smooth experience for users.
👉As its own liquidity provider, Olympus earns its own LP fees (see graphical explanation below).
👉AND LP tokens are technically 'treasury assets' that back $OHM. 23/n

Basically, POL gives the protocol a foundation for longevity.

@OlympusDAO doesn't necessarily have a future because it owns its own liquidity. But it doesn't not have a future because of it either. 24/n

You'll recall Olympus controls what assets are sucked in via the bond control variable (BCV).

I fudged this up a bit in part 1, so here's a quick explain by someone with a less smooth brain. 25/n

via @ishaheen10

Olympus can decide what assets it wants to take in, and how quickly. For example, the % of RFV per $OHM has been declining the past 10 days bc Olympus is hot on ETH rn. 26/n

And lemme tell ya, fren. Olympus has been sucking up ETH like paint from a hose. Wanna see how powerful Olympus can suck? Is 75M in like a week powerful enough for you? 27/n

So how does this bonding mechansim—which allows Olympus to suck value in its hole—help the protocol achieve its goal?

It allows Olympus to grow a diversified pool of reserve backing quickly af. 28/n

Which means more reserve for $OHM, which makes $OHM more valuable, desirable, and sustainable (at least for now). 29/n

This element of control + adjustment is another important feather to put in your cap, because we're about to enter a crucial discussion:

How can Olympus be sustainable with these absurd APYs and discounted bond trades?

One word, fren:

"Game Theory" 30/n

But wot is 'Game Theory'?

Game Theory is one of those terms that gets dropped in day to day life, and it's just a forgone conclusion that everyone knows what it means.
So people are too afraid to ask. 31/n

But like—what games are we theorizing here? Jenga? Saw? Tic tac toe? Jumanji?
It's ok fren, I'll do you an explain—one hard boiled brain to another. 32/n

First off, "Game" is used liberally in the Game Theory context. Lots of the 'games' in question don't even feel like games. And aren't even that fun tbh.

For game theory, all a 'game' needs is:

-2 or more people

-stakes (i.e. a desirable outcome)

-2 or more choices 33/n

Two people sharing a pizza? Game.

Web3? Game.

Job hunting? Game.

4 siblings who share the same bathroom? Game

The entire capitalist system? Game.

Your mom? Game.

Just kitten, fren. She a nice lady. 34/n

The 'theory' part of the equation is the exercise of viewing these shibe 'games' through a mathematical lens.
You can speculate on make believe situations—mapping out:
-here are the players,
-here's what they can win,
-here's what they can do to win. 35/n

And then you can try to anticipate what rational players will do, given what's up for grabs, their possible choices, AND the inherent knowledge that other players have the same choices to achieve the same outcomes. 36/n

There's a loose thread in game theory that we'll pull on in the "risks" segment of this thread. But suffice to say, it's a big assumption to think you're always dealing with rational players.

Hecc, lots of rational players behave irrationally given the right context. 37/n

You probably know what I'm talking about, fren. You've probably behaved irrationally a few times these past few weeks.
Buying high, selling low.
Chasing shitcoin pumps.
$HFSP $FLOKI
It's ok, fren. Me too. Me too. 38/n

So Game Theory takes these 'games' and then layers on some outcomes.

What happens in a stale mate?

What happens when one/some players screw over the other(s)?

What happens when all players work together? 39/n

U take these possible scenarios and plot them on a grid. The size of the grid depends on how many choices the players can make in the 'game.'

For Olympus, the grid is made up of 9 squares bc players have 3 choices: stake, bond, sell.
We'll return to this lil' grid soon. 40/n

Once you've got your griddy thingy, it's easier to think about what the most desirable/undesirable situations are.
You can even make some educated guesses on the probability of a given outcome.
But with this griddy thingy comes great power. 41/n

Because you can even influence the outcome, and steer the course for players who may not even know they're playing a game.

That's right, fren.

We're just playing pieces—mere pawns on a chessboard. 42/n

And that's what Olympus has assembled here. A game.

Who are the players? You and me, fren.
What can we win? Made up blonkchain bucks.
What actions can we make? Stake, bond, sell. 43/n

via @K41105

The gods of Olympus charted this divine rectangle that will decide all our fates for years to come. And they've assigned our potential actions different values. 44/n

Based on the perceived benefit to the protocol.
Note: your bennies & my bennies are decidedly absent from this rectangle of prophecy. 45/n

Staking = +2
Bonding = +1

Selling = -1

With these values, Olympus can chart all possible outcomes.

So simple—our mortal lives—right, fren? That our fates might only coalesce at 9 final destinations within the 4 corners of a rectangle. 46/n

The best situation is everyone staking.

Have you seen the (3, 3) meme? Well, it symbolizes the equilibrium state where players cooperate (from the protocol's perspective). 47/n

The (3, 3) meme ~may~ be even more ingenius than you, me, or Dupree realize. Yes, it's a tidy tribal symbol that makes it easy for members to signal their allegiance. But also... 48/n

If Olympus actually ends up working, and the (3, 3) equilibrium holds, then it means we—as a society—may be entering a new frontier of economic cooperation. 49/n

In the (3, 3) state, everyone cooperates. Everyone wins the game. And we all win together—without the traditional price motivation of the web2 economy.

1000s of independent economic players can come together and organize in a way that grows the pie for all players. 50/n

Do you know what kind of game allows everyone to win?

An infinite game.

Fren. Wot if instead of coordinating around some externally-derived price-based schelling point...we were able to assemble bc the intrinsic value of cooperation meant the assured benefit of all? 51/n

Fr-fren. What if a cooperative equilibrium (3, 3) becomes the meme of production?

ouch ouch ouchhh 52/n

Hecc, sorry fren. Was tryna egg outside my own yolk. I've gone and smushed maself. Now I gotta finish this thread with a scrambled egg brain. 53/n

Back to Game Theory:

And the worst situation is where everyone sells.

fin

(of Game Theory explanation tangent) 54/n

Ur probably wondering:
"Why tf did Bork take me on such a circuitous journey here?"

Because, fren, in order to understand how all of this can be sustainable, you must understand the game we're playing. 55/n

With the 9 different outcomes plotted tidily in a rectangle, the gods of Olympus can skew the playing field. And subtly influence our actions to the desired outcomes.

How?

With the BCV and APY. 56/n

If too many people unstake: the APY increases until OHMies plug the hole.
If the protocol wants more liquidity and/or reserves: the BCV is lowered to entice bonding. 57/n

Whenever they players moved away from the desired equilibrium state, the protocol (as in the algorithm) jumps in to get things back on track.
Now we know Olympus can generally control the equilibrium state, and the tools it uses to do so. 58/n

So let's summarize how Olympus is going to achieve its #goals. Phase 1, goal 1: accumulate wealth, grow like an exponential sombish.

✅ Attract as many early users as possible with a stunning APY 59/n

✅ Attract as many early users as possible with a stunning APY
✅ Entice users to buy discounted $OHM in exchange for it's own LP tokens or designated reserve assets

✅ Achieve POL by adjusting the BCV amplifier on certain liquidity pairings. 60/n

✅ Build reserve treasury through reserve bonds to enable Olympus to mint more $OHM

✅ Reward stakers with newly minted $OHM (that it costs $1 to produce)

✅ Adjust APY to ensure enough $OHM is being staked at all times
✅ Grow the phattest treasury of all time 61/n

In phase 1, Olympus is a shibe currency.

There's waay too much volatility. And the whole goal here is to find a 'stable' price.
You can transact in something volatile—we do it everyday here in web3. But it's not ideal. And most people won't be comfortable with it. 62/n

Olympus intends to transition to phase 2 over the next several years.

The plan is to make policy (human made) adjustments until there are 1 trillion $OHM. 63/n

Keep in mind there are currently just over 4million $OHM.

So it's not like Olympus is going to turn off the APY and bonding vacuum tomorrow.

This means there's still quite a bit of time for early OHMies to share in the growth and wealth of phase 1. 64/n

V. WHAT DO U STAND TO GAIN

"FINALLY! How rich is this shit gna make me?"

The question on everyone's minds.

And lemme say, Olympus could make u rich af. Based on napkin math (that I'll discuss in a mitten) my initial 8 $OHMs might be worth millions by 2030. 65/n

Before we discuss your future fortune, I must do u another tangential explain.

Bc if you don't understand this, then you'll never mount Olympus.

See, $OHM is price agnostic.

"W-wot?! Wtf Bork? What even is that? What does impartiality to Jesus have to do with price??" 66/n

Fren. Ma fren—calm. Pls.

Deep breathes.

As your fren, I need you to temporarily suspend your current understanding of investing as it relates to price and quantity.

Read on with an open mind. 67/n

Olympus built different. Different than every investment u ever made.

The price of $OHM doesn't really matter. Or, it's not supposed to matter.

It might matter for someone looking to buy and sell relatively quickly. But that is not the right mindset for Olympus. 68/n

To hold $OHM, you need a long time horizon. Otherwise you defeat the very purpose of the investment.

To climb mount Olympus, you must strive to accumulate—not appreciate. 69/n

Remember our old friend 'monetary premium'?

Recall how it's a make believe value assigned to an asset based on what people think will happen?

Well, right now there is a monetary premium for 2 raisins. One right. One wrong. 70/n

❌ Wrong: people think Olympus will bring about meaningful value down the road.

✅ Right: people think Olympus will bring about meaningful value down the road AND they want to lock in their proportionate stake in the market cap of Olympus. 71/n

At the moment, there are both these investors. Because lots of people haven't done enough digging to realize that price doesn't matter.

It doesn't matter because if you stake, and stay staked, then you effectively lock in your share of the market cap at the time you stake. 72/n

How can that be?

Our old fren: APY.

Everyday. 3 times a day. Stakers get more $sOHM. And this amount compounds. It accumulates at a similar rate of growth to Olympus itself.

This is Al Einstein's 8th Wonder of the World in action, fren. 73/n

By the by, I've been using "APY" pretty liberally to generally describe interest and rewards. This is partially to keep things consistent+easy to follow. And partially bc I'm a soft-boiled simp. 74/n

The "Reward Rate" is the actual lever Olympus tweaks. This is the % reward stakers get—3x per day. By changing the reward rate, the protocol/policy team adjusts the APY. 75/n

I'm no NASA-certified mathemagician, so pls take this next part of analysis with a wheelbarrow full of salt.

There is definitely a big brain formula that would tell us how rich Olympus could make us. 76/n

It would account for scaled compounding based on predicted APYs over time....or...there's a 50IQ, assumption-laden approach that's probably accurate 30% of the time.

Which pill do you think you're about to swallow, fren?77/n

Since you theoretically 'lock in' your proportion of Olympus' market cap when you buy+stake, we might abide the following wizard formula 🧙‍♂️ 78/n

Step 1: take the value of the $OHM you staked, and divide it by the market cap of Olympus on the date you staked.

Step dos: take that fraction, and then multiply it by whatever future supply of $OHM you think is possible. 79/n

Using this smooth-brained approach, my share of the pie=0.00000275. Wow. smol.

Which means at the following market caps, my share will equal USD$n:

10B = USD$27.5k

100B = USD$275k

1T = USD$2.75m 80/n

Hawt dawg.

That's a lot of schmeckles. A doge could buy a lotta kibble with that.

An alternative way to calculate your riches is via one of the calculators people built.

You may have seen this one: [docs.google.com/spreadsheets/u…] 81/n

These calculators are fun to look at, but not super helpful over the long term.

They can give you an idea of what to expect in the short term, but they can't account for multiple reward reductions and price fluctuations. 82/n

Also, I hope it goes without saying absolutely none of this is France advice. 83/n

Alright. Fren. I'm calling it here. Even though I wanted to put out the 'will it make me rich' section with the 'risks' section, part 2 has become too much of a behemoth.

And there are still so many steps left for us to climb @OlympusDAO. 84/n

I shall endeavour to have part 3 out soon. And again, I'll put these all into a pdf when I'm done to make it easier to read.

Give yourself a pat on the back, fren. You did some good lurnin today.

May your your weekend goes uppey and to the right. 📈

~bork

85/fin