Olympus DAO has cut the OHM token’s annual percentage staking yield to 7.35% in the hope of making the protocol sustainable. The rewards were reduced after the DAO approved a governance proposal called OIP-119.
In a Thursday Twitter thread titled “Say bye to high APY,” the project clarified that while the DAO’s prior objective was to bootstrap adoption by offering very high yield, it’s transitioning to a new tokenomics framework.
Olympus DAO is a DeFi protocol with a treasury that backs the OHM token. It has a two-pronged approach to its operations, according to its website. The first is via cryptocurrency bonds denominated in vested OHM tokens. Here, the DAO issues OHM tokens at a discount to investors in exchange for their cryptocurrencies, a process designed to grow its treasury over time.
The second is single-side staking of OHM tokens. Currently, the official website shows this yield to be 267% APY, paid to those who deposit OHM to its single-side token staking pool.
After the latest governance proposal, this specific staking yield (also called “base rate”) will be lowered to 7.35%, the DAO said. This change will help the project achieve more sustainable growth, the DAO explained.
Six months into its launch, in November 2021, the market capitalization of OlympusDAO’s token OHM skyrocketed to more than $4.3 billion. The token’s market cap has since declined 93% to $293 million, according to CoinGecko.
Currently, Olympus has over $266 million in crypto assets from user deposits. The DAO manages these funds as a protocol-controlled treasury to back the OHM tokens as well as fund its operations.
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Vishal Chawla is a reporter who has covered the ins and outs of the tech industry for more than half a decade. Prior to joining The Block, Vishal worked for media firms like Crypto Briefing, IDG ComputerWorld and CIO.com. Follow him on Twitter @vishal4c.
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