Zeus: Olympus DAO – The Decentralized Reserve Currency #428

Transcript

welcome to epicenter the show which talks about the technologies projects and people driving decentralization and the blockchain revolution i'm frederica anz and i'm here with zubin koticha and today we're speaking with zeus um who is the founder of olympus dao olympus dao is an interesting project it is a protocol managed treasury that some have called a ponzi and we will get into that in just a bit but before we speak with um zeus about olympus now um let us tell you about our sponsors this week tally is a new wallet for web3 and d5 that sees the wallet as a public good

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and it's a proposal to spin out the cow protocol team and launch its own token you can vote on that now perfect cool zeus thank you so much for joining us yeah it's great to be here thank you for having me it's a pleasure um so zeus obviously um you're a non so basically um we usually ask people um what they did before and how they got into crypto so maybe you can give us like the um slightly glossed over version of this yeah um spent a couple years in traditional markets and then got into

crypto in like early 2018 um spent some time trading uh eventually you know i think especially during the the 2018 to 2020 like zero sum bear market trading environment um decided that that was not really the the best use of my time um but defy summer occurred um and you know there's this proliferation of new ideas and you know like this first real um utility for smart contracts and you know especially on ethereum or pretty much solely on ethereum at that point um i found that fascinating um two that stood out to me was you know kind of

earlier in the like actual summer um was ample fourth and uh the other being like the the basis uh esd dsd whole wave of senior age um like stable coins uh you know i was especially drawn to algo stable coins um you know i kind of came in as a bitcoin guy i see you know the one of the biggest utilities of this new like blockchain technology as um you know creation of new uh user-owned and decentralized currencies and monies um and so that was you know where i kind of kept most of my attention um you know i

kind of witnessed the the the the rise and fall of all those different experiments um it got me thinking especially with ample fourth and like the rebasing where you know it's a pretty new phenomenon in you know finance in general is just the ability to you know unilaterally adjust um supply of an asset um and yeah i mean at that point started thinking about the the base concept that ended up being olympus um tried to pull kind of the things that worked didn't work from um all these various experiments and then yeah um kind of you know created this persona in

december um met z prime or memphis scontes who rip he was supposed to be here um unfortunate but uh yeah i mean kind of got into the swing things we we launched olympus back in march and yeah it's been a pretty crazy year and i'm sure we'll get into that cool um how would you describe ohm in a nutshell and what made you excited to build this or how did you come up with the idea originally yeah so ohm aspires to be a reserve currency um and the the key word there is currency right so

first of all not a hedge fund not trying to be a hedge fund um a lot of people have been claiming that we are and i i disagree and i don't think that like an amount of money makes you a hedge fund just by default anyways um you know so what i see is that we currently have several different forms of money in crypto um you know so the most well-known ones are probably bitcoin and ethereum um but we don't have any actual currencies um there is a difference between the two um so the things that are held up as you know great for monies like bitcoin and ethereum you know the fact that they are hard and that they're you know a immutable a monetary policy to at least a high degree and that they um you know are in some part designed to appreciate

indefinitely um you know those make for great monies they don't make for good currencies um and what we've seen is because of that or that lack um there has been this hyper dollarization in the industry um so stable coins are you know the the fastest growing asset or yeah like class of assets in crypto by a large degree you know they make up spots like three and four on the top ten now you know there's like more than 150 billion in market cap um it points to a massive market need for an actual currency in the industry um and if we don't build one that is define native or crypto native it will just be tokenizing the tradfy equivalents um so you know that's the goal of home is to

be that uh you know internet native currency rather than a money so how does home is set out to um become a better form of currency than the us dollar yeah so there's a couple components one um you know so there's this rebase mechanism in the i'm sure that we'll talk about this more but you know what one of the purposes that that's meant to achieve is that you don't want your currency to be changing rapidly in value over time or you know pretty much at all like you know the ideal currency is going to maintain the same purchasing power

indefinitely um you know maybe some amount of uh inflation is good and that it pushes people to use their money and not just hoard it but you know you can just think it's like ideally flat um you know if you have that's difficult to to uh to balance with incentives um right where there's this this need to incentivize people to build up a new monetary network you know you're gonna be taking on risk that it doesn't work um you you also have other opportunities that you can go and you know take your money to pursue and so there needs to be some incentive to bootstrap the network um if

you don't want that incentive to be price growth then you need something to defer that price growth onto something else so you know um there's this rebase mechanism that essentially grows supplies so that the price can stay relatively stable where you know the the price of ohm has been plus minus i mean it's like somewhat volatile but plus minus you know 50 200 percent um the same price since we launched um i think currently like as of today it's 50 below like the the initial price of the network has grown but the the price itself can remain within a consistent band where you know the the goal intent is that over time volatility constricts

but you know you always have a reasonable expectation of what one ohm is worth um you know and that allows you to to price goods efficiently you know like i would point to like the biggest issue with a currency that is you know one volatile or two uh you know consistently trending in a single direction is that you're constantly forcing people in the economy to update the price of their goods right so if you're a company and you're trying to sell some item um and you determine based on the input costs and how much profit you're trying to take that it should go for this amount of money and you spend a bunch of money on marketing to advertise that product to people saying it costs this amount of money um if that price or if the value of that

money is constantly changing then you have to like throw that out the window you know every couple months and update all of your materials saying oh it's actually now this price and you know you it produces instability within the economy because people never have an anchor to lean on does this compare to other mechanisms that aim to keep stable value but not necessarily dollar value so an example of that would be rye what do you think ohm does better or differently than those yeah so i mean the difference is just that they're you know while we're in this very early stage of ohm there's a speculative component to it um you know there there is upside in the

growth of the network and you can take part in it um you know like rye essentially took the the route of let's be that currency from day one and the issue that they've run into is that there's no incentive to grow that network or really use it where you know like the the end state is yes you have a non-usd currency that like has its own monetary or independent activity but you know there's been a very difficult i think uh like acquisition of user experience for them where like you know money or a currency is a network effect

at the end of the day you know it's just a medium for people to interact with each other um and i would see the the you know that ultimate behavior as needing the network effect behind it already um for it to really work otherwise like yeah i mean it just makes it a lot harder than you know we are in an industry that is primarily driven by speculation and you can either fight that or you can harness it um you know that's kind of the difference that i would say is the so it seems like you mentioned there's like a speculative component or we're in a speculative phase for ohm is that something that you see going away and how do you like get to

a non-speculative phase yeah so i see it diminishing um so a lot of this is modeled on bitcoin where it's not trying to replace bitcoin i think that there's no need to do so but rather to take what worked for bitcoin and apply it to something that it's not trying to do which is money versus currency um and what we've seen with bitcoin is that you know as it gets larger you do have just natural reduction of volatility um you you do just have these things start to take form i don't think that they will ever like reach a point of forex level or like low volatility but you know

essentially like i i would see it as with growth you hit points where you know just the expectation of returns diminishes um you know like what people are shooting for with a a 10 million dollar asset or 100 million dollar asset is very different from a trillion dollar asset um i don't think anyone's looking for the next 100x on bitcoin um you know and with that like you know just as you scale the the expectations diminish and you know it becomes more palatable because you you've introduced different people that are there for different reasons than you know they might be very early on um you know it's also at that point less of a speculative endeavor um you know conceivably many of the issues and open questions and you

know all of these risk surface items that you know create the asymmetric opportunities um you know have been answered and have been satisfied already so ohm is fractionally backed um by a basket of assets um and this basket of assets so basically as far as i could see it's mostly usd um stable coins and pretty volatile assets like ether right so basically how does this um comport with what you're saying about a stable asset that's not correlated to the dollar that's not um that doesn't that's just not just pegged to the dollar

yes i you know one i would not consider there being a direct correlation between the value of ohm and the value of the treasury um you know there's an indirect correlation between the two but i you know like if eath is 100 of the treasury and each goes down one percent that does not mean that home is going to go down one percent um excluding the the liquidity portion of it which uh i'll touch on in a sec but um you know essentially the goal there is that we are accumulating what is currently considered money um or our currency you know like those are whatever or what is recognized today um you know there's no reason to fight that um you know essentially the purpose of the treasury is that the

the protocol has purchasing power uh you know to influence the market if it needs to um and to do that you need to have a treasury that consists of assets that will continue to be recognized as valuable um you know like today i would consider those as you know primarily usd and then uh like east btc and it's a lot easier for us to have than bitcoin um you know bitcoin on ethereum is trusted in any form to some degree um so you know it's primarily there's also liquidity in there um you know so that liquidity is paired against also you know like die or eat um but they are different assets in that uh you

know the liquidity is paired against ohm um you know it has very direct like utility for the market in that the protocol is facilitating trading at all times um and then you know one other piece that you know i think is super interesting and i don't think gets recognized that often is that because the protocol is the one providing all the liquidity um you know anytime that someone is making a trade the protocol is a counterparty on that trade um so there's this question of like you know when is the treasury going to be deployed into the market you know especially like lately because we've you know been down in the dumps a little bit and it's like okay the treasury is actively buying back every time someone sells uh you know it we we keep you know generally more than half of the treasury

in liquidity where you know it's actively deploying significant amounts of money to allow people to exit if they want to um you know there's reserves which is money that is kept off to the side um you know for the purpose of like you know you don't want to have everything exposed to the market at any given time um but you know that is actively a dynamic you know pretty much 24 7. got it so you have this protocol owned liquidity which is the protocol basically buying and selling um and it seems like that's related to bonding there's like bonding and staking right that are the two main things that one can do in the protocol

can you talk us through how that creates this more stable uh uh currency that you you aim from with with own so i'll first just kind of explain them so uh bonds are uh a automated and i i see it as it removes moral hazard from the equation of the protocol liquidating its own token in exchange for assets so it's looking to accumulate assets um you know there's a route that you could take of just mint a bunch of tokens into a multi-sig and sell them into the market that is

wrought with moral hazard um you know there are so many things that can you know either go wrong there or be you know used for malicious actions in you know either a direct way you're just like stealing money or an indirect way of your front running trades and you know you're doing things like that um so the bonds you know have it's essentially a mechanism where it spins up an isolated market for an asset um it prices that asset based on third-party behavior um it doesn't use an oracle and um you know one thing that is unique to the way that we implement them is that they defer trades over a set amount of time um you know so you uh go

and you bond and you know maybe your vesting term is a weak um and you will not receive those tokens until a week from then um you know the the protocol pays a little discount or a low premium on the assets for that because you as the buyer are going to look for some level of discount to accept that illiquidity you know otherwise you can just go to the market and buy there um and you know you have the tokens right then one of the things that the the bonds accomplish is that they you know provide liquidity into the market um where you know right now it's one directional flows um so it's providing sell side liquidity um that's kind of a meme when like vcs say it but i do think that it's it's quite valuable um in that you know one of the

issues that you will run into especially with early stage projects is just that there's not enough liquidity for you know people to enter um and so they won't um you know if it's not where you can only buy 10k worth without moving the price by 10 and so you know if that's not enough of a position for you to really care about it then you're just going to go somewhere else so i i i will add you know i think that especially probably in the near future that will move to a net system where you're doing two-way flows protocol is actively buying and selling and it just becomes what is the net of that so has it sold more in this day has it bought more this day and that gets determined by how people are behaving in the market so if the

market moves down it'll buy more if the market moves up it'll sell more and then if the market goes flat um you know you have some net that's kind of like tuned the the staking is this component where you have tokens and you can stake them with the protocol to earn more tokens um and you know especially historically this has been had quite high rates um the reason for that is that the protocol was accumulating assets at quite high rates relative to to market cap and to uh you know the treasury that it already had um the dynamic that this has so when you offer bonds they are inherently deflate or dilutionary onto the market right so you're creating new supply and you're adding it into the market

um and you know everyone else's ownership of the network is going to decrease as a result of that um the the analogy that i would use here with how staking plays into this and i see this as one of the the chief like benefits of it is you know imagine like a a bucket or a pool or something of water and you you drop some dye into it and if that water is still you're going to see the dye in the water um you know it depends on how much you put in there but if you imagine it's like a decent amount then the water is going to change colors what the staking does is it makes that water moving so you know now imagine the same thing but with a stream and you dump or you know die into the stream and

you'll see it for a second but then it dissipates and it moves because the water is constantly moving and it's getting shifted around to everything and it gets swept down um where like i think it's pretty crazy so we have grown supply since launch by 87 and the treasury is worth 600 million dollars um you know our our market cap has been below that for what like 60 of that time um you know so without even selling half of the supply um you know it was able to accumulate a significant amount where you know essentially that staking component protects everyone from that dilution um it spreads that impact of the bonds out um you know it defers it over time so

that it is not you know it would be economically unfeasible i think to do this if you did not have that staking component there um the good thing though is you know because we started with you know very very high rates um and you know the result of that is one you're gonna have a lot more volatility because supply is growing really quickly um you know two the the bond discounts get really deep um because you know there's additional implied volatility there's also um you have to kind of keep up with what what staking is going to provide um and so the protocol has to spend more for every you know asset that it takes in um but you know we we started out very high because the treasury started with like a

quarter million dollars and you know the growth that you're targeting is incredibly high in a percentage basis from that um you know at this point with a 600 million dollar treasury you know like the the growth that we target remains high but it's not that high um you know it's significantly lower than it once was um and so those staking rates can come down and with those staking rates coming down um you know you see decreased volatility as a result of supply expansion um you know the the rate at which everything is growing around uh you know the the liquidity and around uh the treasury is diminishing and so the treasury doesn't even have to sell as much because you know

essentially the goal with the treasury is that you want to keep up with the rate of inflation in the network um you know you don't have to at ever at any single given time so there are times when you're you know growing slower than the network times when you're growing faster than the network um but you know on a net basis you want to match it if supply is growing slower you don't need to do so as quickly yeah it just makes everything a little easier you can start to smooth things out um you can start to like we're pushing out the bond terms now where you know we we had five day terms for pretty much the first nine months and now there's like a there's 14 day minimums there's like a 30 day out there now i think that we're going to start pushing

for like a 60 and a 90 day um start doing quarterlys um a lot of cool stuff opens up when like you don't have 10 000 ap wise um you know it's actively like a negative it served its purpose but glad we're done with that zeus um can you maybe um talk about bonding and staking in terms of when they under which conditions they make you money and under which conditions they lose you money yeah so um i'm going to talk in terms of how the bonds work now um they shifted a little bit we have this like v2 mechanism but i don't think that it's

that useful to like go into um so i mean it actually makes a lot easier with like this geom token that we now have which you can think of it like a bag of ohm you know so it encapsulates all of the rebases that are experienced in the market um so you know it uses this index which started at one when we started and then every time there's a rebase the index increases by the rebase amount um so you know if you're a staker the the price of ohm itself is not particularly important if you look at the price of gm that's essentially like the the the analog to like a normal token um which some people don't like this and i understand why but you know i i do think

that at this point like you know uh having that direct relationship available to see easily is a positive um but you know essentially as a seeker what you're looking for is that you know your holdings uh increase at the same rate or you know probably ideally for you uh a greater rate than the price of ohm depreciates um and you know there's this decorrelated uh dynamic between the the staking growth and uh the price of ohm so you know the staking index is constantly increasing um price to own kind of trades on its own so you

know over a long span of time it's expected to depreciate um but you know it has periods where it appreciates those periods where it depreciates and you know like you can expect in in the long term that it will decrease in price but you know the the path that it gets to get there is anyone's question um for a bonder i mean essentially what you're looking for is a similar dynamic but or adding a time component to it um so the way that the bonds work now which is a little different from how it used to is that you are offered a discount that discount gives you an amount of geom which is staked um and you now hold staked exposure

um but you're a liquid until some amount of time into the future um so you know the dynamic here and you know what we generally see is that you are a um or you're a staker already um you see some discount that is appealing to you which you know pretty much any time it's above zero percent you're going to outperform if you just staked either there's some amount of extra discount that you're going to want because now you have to be a liquid and you weren't before but you know let's say it's two percent where you're like yeah that's that's it um you would you know on stake go acquire use your own to acquire whatever asset the treasury wants give that to the treasury the treasury will give you this note that says hey in two weeks i'm gonna give you this

amount of geom that is two percent above what you had before and you've now increased your holdings by two percent um so it the way that it primarily is utilized is essentially like a mechanism to increase your holdings in the network so you are assisting the treasury in acquiring assets you're doing the uh the actual execution work for it right so this is this like removable moral hazard is that you don't have anyone doing execution of trades you know it's decentralized and it's uh like carryout but you're also taking on illiquidity for the network um and in exchange for that you get to increase your holdings in it um so you know it's this like accumulation mechanism or

method so in effect you you give the dow a loan right so under which circumstances would that be um a loss-making operation for you yeah so um i mean i i would say in ohm terms you're never going to take a loss um the the loss scenario would be let's say you hadn't gotten the bond and you know it doesn't even need to be price goes down because you can think in opportunity cost terms i think that's more fitting but price goes to some level where if you were liquid if you had those tokens in your wallet you would have sold but instead because you're illiquid you cannot do that um

and you have an opportunity cost of not being able to do that so that's your last scenario there is that you were not able to take that action um until you know however many days or weeks in the future that you can now receive your tokens back um and do whatever you want with them so um if you say you can't take a loss in terms of ohm basically if the value of ohm decreased you would take a hit right well you would in usd terms or east terms or whatever but in terms of ohm um you know you were staked with some amount you bought a bond with a positive discount you have more room than you would have had otherwise unless you were doing like a swing trade where you sold

and then bob back but i mean that [Music] i don't know i would consider that a little separate um it does prevent you from doing that because you're liquid but um if the the scenario is uh you're staked or you bonded at a positive discount i i can guarantee that you have more home at that point than you would have otherwise oh yeah so basically you have more ohm but that oh might be less it might might be worth less yeah okay yeah no no so totally um like you know at the end of the day it comes down to usd value i guess for i mean we want to displace this dynamic right but it generally does come down to what is the dollar price of my holdings and yeah if the price of home goes down

greater than the staking rewards uh provide you more ohm and greater than the the discount on your bond bumped up your staked holdings then yeah you would take a dollar loss one question around this so it seems like the dynamic for stakers is that you and just tell me if this is like along the right track you lose money on depreciation of ohm but since you're getting paid and rebasing every time home is bought your you would expect to be net positive is that how it works in terms of like staking yeah so i mean

essentially your value equation is price times supply so you know for for most assets your value equation is just going to be price you know that's the only independent variable that influences anything um and you know your holdings are going to be static maybe you're staking for you know five six percent yield or something but you know you can consider that someone negligible so you know really all you care about is the price of the asset whereas in this case it's a two variable equation right so it's the price of the asset times how much supply i have um and you know you combine that into what the actual value is what what uh leads you to believe that in the long run

the money that stickers make from rebasing will be higher than the amount they lose on depreciation of home price um yeah so there's this argument that has been made which is that om should trade for the value of the treasury um which which i think aligns pretty well there is you know this idea that oh you're like you know it's just gonna depreciate back down to the treasury and uh you know whatever value you have is just going to be whatever the whatever your like rf or like if you have one percent of the network one percent of the treasury is going to be your value um i

i think that that take is very flawed um you know the easiest way to debunk it is that it's like the equivalent of just saying that any asset should go to zero over time um you know because that's essentially what it is like i i view the treasury as offsetting zero up right so you have you know in a normal network that has no assets behind it um zero is zero in an or in a market that has a hundred million dollars in assets behind it a hundred million is zero um you know that's the point on which you can ascen like zero is your floor for the market and if you have an entity or you know the protocol which can set the floor at a higher price with

infinite assets relative to to supply to you know uh maintain that floor like you literally cannot lose this game you know it has more money that it can buy back every single token in supply and have money left over um then you just offset your zero up um so you know is there a guarantee that staking rewards increase faster than the token depreciates no same as you know is there a guarantee that bitcoin will go up in price no um is there uh you know is there any guarantee that uh you know usd will depreciate slower than the federal funds rate like

probably not um or even faster than your curve yield no um you know everything carries risk um you know especially anything that has upside right so if there's upside there's always going to be downside um you know i i think that our success comes down to a lot of factors and like like really the the staking yield is a abstraction right so it's kind of irrelevant um you know it serves a purpose which is that we can have a relatively or we can have consistent pricing on the asset while still having growth in you know that people as part of the network can take part in um but it's kind of irrelevant like you know this is why i kind of like gm even

though a lot of people don't is that it does like shatter that illusion um and i think that's why people don't like it but like you know it's gotta happen sometime and uh you know like that's essentially what the the staking abstracts away you know and it has purposes that are not really like make you think that you know i don't view the the purpose of the staking rewards as make you think that you know the price will stay completely flat guaranteed and you will earn a thousand percent apy so talking of of yield so um olympus now advertised for the longest time and i think still does

um ap wise of a thousand to ten thousand percent um can you explain those yeah so uh the equation to compute apy in any scenario is the the amount of yield in some period times the number of periods in a year so we do rebases every eight hours in a year there are a thousand and ninety five eight hour epochs um if the yield is like one six percent then you end up with a thousand percent apy um you know historically it's been higher i think early on it was like point six or something um but you know like

that is computed correctly um i also you know would pretty strongly argue that it was true um you know so what we're looking at we're still two months out but the you know initial apy for staking was around a hundred thousand percent and we will probably end the year at 130 index which is actually 13 000 but i would consider that pretty damn close um you know and in the coming years so we're lowering to a thousand percent roughly um which i think will be done in like a week or two um the expectation is that that is maintained for around a year um you know

essentially we have this framework um that every time supply has increased by a thousand percent the the rate is cut by i think it's 25 or 30 percent uh per epoch um you know so essentially like you know with a thousand percent apy that will be a thousand percent apy for the entire year um and you know that framework is also like very public and widely known where you know you you can forecast it pretty easily into the future even if like you know like the rate is accurate but whether that persists for one year from when you start is a question but you can compute what it will actually be um

just based on that framework yeah so so zeus um if you zoom out a bit um where does the value come from so where's the value actually created yeah so it is a mix of intrinsic value which is the treasury and extrinsic value which is a monetary premium um so if you look at bitcoin or eth um you know there there is some level of value there and like you know i think eth is probably the stronger one that you can make this argument on but you know that comes from fees um that are generated um but you know a very large degree of it is just monetary premium

same goes for gold where there's industrial uses for gold you know you can turn it into jewelry that's not what makes gold a five or ten trillion dollar asset um what makes it a five or ten trillion dollar asset i don't remember which one it is but um is monetary premium it's that we as human beings figured out a long time ago that it's inefficient to use as money something that is worth that actual amount um you know because then you're just wasting a bunch of value in the economy and so instead we place a monetary premium on things we increase the value greater than what it actually is so that we can trade with something that you know is really just based on social consensus um and utilize value for

actually valuable activities rather than just to sit in a vault or your pocket or under your bed waiting for you to go spend it and then someone else does the same thing with it so what what i take from this um is that basically you can you can create arbitrary profits as long as people don't cash out right so basically those are book profits um so basically if if i wanted to i could start um the stable coin and say doubles its value every other value every other day and on paper um the holders of this stablecoin would soon be very rich indeed um but if they end up looking to redeem that's a totally another story right so basically can you walk us through how um olympus

would deal with a significant amount of um uh stakers and bonders redeeming yeah so i mean like i'll first say that this is the case with any asset so it doesn't even have to appreciate if anyone holding or if everyone holding some asset looks to cash that asset out the value of it is going to go down um you know unless you have some entity or group of buyers that are going to buy every single token off of them um you know it's just how a market works right supply and demand uh pushes the market to a price at a single point in time based on supply and demand at that time um and if supply or demand changes then the price will change what the protocol does

do is you know one it facilitates trading and offers the market itself um so you have this guarantee that there will be liquidity in the market and so you know on a normal day when you're not in like if you're not in a bank run situation then the the protocol is completely capable pretty much all the time of allowing you to get out if you want to get out um you know which like bank run scenarios are really a loss of confidence um and so you know essentially like i'll i'll talk about that but barring that loss of confidence there's no issue there you know uh you can have the same dynamic with third-party lps but you have a trust relationship that those lps are going to continue to provide that liquidity

otherwise you can have that dynamic deteriorate so like suddenly there hasn't even been a loss or loss of confidence with holders but no one can leave um you know there's just no liquidity for you to sell into um in the the bank run scenario um so you know you still have the protocol providing liquidity and so you know it's actually buying back throughout this process but the you know the price starts to tank because more and more people are selling and you know that leads to more and more people selling um and you know you can kind of spiral again this is a dynamic that you can see in literally anything but you know we're not immune to that um we have yet to do this and i will

kind of go into why but you know the the idea is that in these scenarios the protocol taps into its reserves and says okay we're gonna step in and provide that buy side liquidity so you can leave and because this is a confidence crisis at the end of the day it's just that people are scared that if they don't leave now they're not going to be able to and so everyone wants to leave at the same time the treasury's stepping in uh quells that confidence issue right suddenly everyone is satisfied because oh if i want to sell protocol's got my back treasury's got my back it's going to let me do so at a reasonable price and so i don't need to sell and suddenly no one wants to sell um you know like this is how

currencies work like you know if everyone decides tomorrow that they need to get out of usd or euros or you know anything those you know even the strongest currency in the world will collapse um you know it is guaranteed like um you know it's just a matter of like generally that's not an issue i mean when it is an issue they can step in with their foreign reserves and you know satisfy the the masses that are so scared um you know this is what like fdic insurance does as well for you know commercial banks which you know instead of being worried about a a bank run that everyone is going to pull money out of your your specific bank and there's going to be no money left because you know the bank is doing

factional reserve and it's lending out your money to someone else and it doesn't have it on hand um fdic insurance in in the us uh will print dollars and give it to the bank so that that concern does not exist there is never a scenario in which there's not enough dollars to pay you back um and so you never see a bank run because why would you have a bank run there's no concern to be had um in terms of why we haven't done this yet i i see it as just a matter of scale right so essentially the bank run situation is a game of chicken you you have the the market which is looking to exit and you have the the treasury which is looking to prevent them from being concerned so i guess the

the market is concerned and you know their action that they will take is that they're all going to dump um and the the treasury wants to to calm those concerns and you have a game of chicken who's going to blink first is the market going to blink is the treasury going to blink um the dynamic that you need to have there is you know who's going to win this game of chicken right so if the treasury steps in and it starts buying but you know it has to spend too much of its reserves to do so and suddenly the treasury is shrinking too you know that's going to compound the issue it's going to make it worse um because you know suddenly whereas previously you had the treasury can step in and you know people are gonna be calmed by that alone um where you know the

bankroll won't be as bad because that still exists um once you start tapping it in in size you are you are gonna get hit with a situation of like oh [ __ ] now the treasury is smaller too and so there's people that were fined before and no longer um so the the dynamic that you need is if you think of this game a chicken has like two cars and they're driving uh at each other and it's a matter of who's gonna turn first you need the treasury to be in an 18-wheeler you know it's got to be a much larger car than the car driving at it so that that car driving at it knows that it has no chance of winning this fight um you know it can overpower you with ease it's not going to tap in even a significant portion of its

treasury and it's going to calm everyone down it's going to be just fine and that removes the need for this or scenario to ever even happen you know be because you know that it's just going to win like you know there's this common saying like don't fight the fed you know it's because if you fight the fed like you know maybe there's some tail risk scenario where the fed actually does lose but you know one you got bigger problems that happens and two it's you know pretty unlikely and that's like the last event that you're gonna have is when that when that occurs um so you just don't do it you know you you don't like it it's gonna win well why why fight a fight that you're going to lose but zeus i mean the reserves are way smaller than the outstanding loans

right so basically how do you um create that confidence if it's not borne out by fact the treasury um is a smaller basically if everyone who held home where to cash out um there's no way that this could be um could be borne out by the treasury right yes um so it really just comes down i mean so i would ask the same with like literally any asset where that is the case um the the difference is just that you have a guaranteed buyer in the market and you know it comes down to a nominal game where like you know historically we have been

on a reserve basis backed five to ten percent and on a total treasury value back to like 20 to 40 percent um so you know in that scenario where it's like 40 percent right now you know so it's a billion dollar actually right now damn it's like 60 you know it's a billion dollar market and you have you know like 500 million in actual assets in the treasury you know there's a reasonable case that like you could deploy those assets and you know like accomplish that goal but the issue is still that that's not that much money in the grand scheme of things um you know so there's plenty of just

single whales in this industry that have multiples more money than that um you know like so the nominal kind of hurts you and that you know the nominal needs to be to the degree that like there's just no point here um you know so if if you maintain that same level of backing and this grows into a trillion dollar asset then suddenly you have a treasury with 400 billion dollars in assets in there with the sole purpose of just cashing people out if they want to get out like that's probably enough liquidity for everyone you know bitcoin doesn't have 400 billion dollars worth of assets in there waiting to deploy in and you know it's drawn down but not like you know there's no bank run concern really at this point in time you know in

this point in its life that everyone is going to dump like this is the ponzi argument that people made at it for literally a decade is you know if everyone decides to sell it's going to go to zero and they're right but like you know monies and currencies are a consensus uh mechanism you know they come down to just social consensus that this thing has more value even though inherently it does not or in our case it does not to that degree um you know like i think it just comes down to you know time where you need to go through a bunch of really tough scenarios and you need to you know rise really quickly and drop really quickly and you know kind of

lash people from side to side and really show them like okay here is every scenario that can happen and it's still alive you know that alone just has that dynamic of like you know mitigating that concern i i would like to add something here so i i think this is um i see where you're coming from but for instance die i mean this is over collateralized so basically this does not hold right and basically also for the us dollar system yeah i mean obviously i mean we've had fractional reserve banking for a long time and it's not covered in gold or anything but i mean if you look at the assets that back the debt um that is um that is held in u.s dollars you know all the houses and

businesses and so on that is actually i mean the value of that is actually way in excess of of of the us dollar value as well right so it's so in a way this is also over collateralized so i would view them essentially traditional currencies are debt-based currencies right so they're you know for the most part produced by collateralized debt against something else you know there's plenty of under collateralized or uncollateralized debt out there but you know like all you're talking about with you know you draw you know you take out a mortgage against a house or you know something like that um you're right in that i mean there's an argument to be had like you know this

debt is going to inflate the price of housing and you know like the actual value of that house is not as great as the loan that you took out but you know barring that um that's correct like you know ohm is essentially equity um based currency so you know instead of a debt relationship you have an equity relationship you know which is more akin to like how money works which is pure equity in a sense um you know i would also just argue in the case of like die um you know there's a much trickier relationship like this is something that i kind of learned with the the whole algo stable wave which you know if this is a confidence thing you know and that's really what it comes down to is just like you know how people on a aggregate level are viewing this um

a peg is a very dangerous thing because you're essentially telling the market to derive all of its confidence from being this one price and if it is ever not that price you you risk eroding confidence like on on an aggregate level and when that happens you compound the issue because you know you you depend slightly and then people start to get out because you've depended slightly and suddenly you've depend more and more people are going to leave and you know you can spot like this is how all the algo stables essentially failed is that you have a very small depending incident that turns into a full-on collapse we don't have a peg you know so it it remove like you know this is why you need to be over

collateralized as a stable coin um you know here i have one more point there but like um you know to a large degree is that you need to have absolute control over me maintaining that peg at all times otherwise you risk total collapse um and it can happen in an instant but essentially what the debt does right um in that collateralization is that guarantees demand for the asset right so you don't need to have someone come in and buy die for die to come back up to peg you know because you're just going to liquidate debt and that's going to serve as your demand and you can guarantee that um that's the same thing essentially that the treasury does which is that the treasury guarantees that there will be demand in the future for the asset you

know so it's a similar purpose but you know like i i personally think that like debt-based systems turn pretty insidious um you know relatively quickly and like you know i i think equity-based currency is you know at a bare minimum like pretty unexplored in you know like modern the modern currency landscape um i'm of the belief that it can work but you know i guess that that's part of the the grand experiment one question i i have around this is um empirically you talked about being down in the dumps a little bit um how have like stakers and bonders done

and what do you think is driving that market cycle so you know i think that one of the the main issues so there there's two components that i i think really like because you know you can look and like it's draw down a lot but if you zoom out more than like three months it's you know remains flatter up you know i think that there was two things so one was the entrance of a new type of market participant in mass which was a lot of people that we're looking at the apy is guaranteed money and we're we're aggressively deploying in and you know discover that it can draw down and you know suddenly like you know the the time

horizon was very short you know they're looking to come in get rich quick and then leave um and you know you can look at pretty much any any market in the world you know if your your market becomes dominated by those type of participants you're just going to go up really high and then you're going to go down really far just you know how it works because you know it's a reflexive relationship i mean i personally like essentially spent past august of last year like disconnecting from social media and was not particularly active in the community um you know i i do regret that now because i spent you know the first six plus months of our existence like really urging people against that you know trying to explain that the the yield is not free money it serves a

purpose and you know we're communicating like you know essentially what it is but you know that's not how you should view it it's not that you are guaranteed this amount of money um you know i i stopped doing that for for a period of time and i regret that um you know i know that there are other people that did that but the the other voices on the other side of the aisle kind of won out i think for a period of time um the other issue that we ran into and i think this was the much more significant one was debt right um so you know kind of going along the lines of this is free money people started to lever up aggressively um you know they call it nine nine um you know so you take you you take your home you go to a lending market you

borrow against it you use that to buy more home you know hopefully you don't do this again where you lever against it again but i think that there were probably people out there doing that um where the the market built up like a quarter billion dollars worth of debt in the span of like two and a half months um you know aggressive growth of debt um and you know compounded by the fact that because this is on a secondary market um where you need real people lending money for people to borrow so you can compare this to like die which is a primary market where die is minted for you to borrow and so you can control those interest rates and keep them low um the interest rates on these debt was very high you know people are paying 22 25

interest um which when when you put that on a quarter billion dollars of debt that's a lot of interest payments and that's interest that has to be paid in die in usdc and you know external assets and because people are levering up you know they're putting money into the market today and there's not a whole lot of guarantee that that money is going to be there tomorrow and so we've had this massive debt unwinding where like 200 million dollars worth of debt has been repaid in the past two and a half months um enormous sums of money you know i'm of the opinion that literally no other market probably like in the industry barring like maybe major caps um would have been able to weather that kind of

storm like you know if you think about the amount of liquidity that is required to not only pay back 200 million in debt but pay back everyone else that's trying to leave as that debt gets unwound like you know it's insane um you know and it's really just facilitated by the fact that you know in any other situation like this where you have third-party lps they would have pulled their liquidity a long time ago and suddenly you have a a market that has 250 million dollars in debt and 2 million in liquidity and you know you go to zero all of the lenders are [ __ ] out of luck like you know and that's the end um you know i think that like this was a great demonstration of the fact that like yes you know we've drawn down and it's been painful um

you know we've essentially unwound all of that debt um we were able to do so while paying back every single lender um you know so i think that proves that this is a great market to lend it you know like you know keep those interest rates low because you know it's a pretty safe place apparently if you know not only can it grow very quickly and you're just going to have people that take profits based on that growth but it can also pay back all of this debt in a very short period of time i mean those are the the two main pieces we also had this migration um where we moved to new a new contract set and there's just a lot of communication like challenges going along with that there was the introduction of this genome token which was like a whole

other thing of people not understanding how that works and it you know shattered the illusion a little bit which you know i i am of the belief that like really the people that draw the most like that dislike that the most are those that were kind of coming in with that short term mentality um because it shatters the illusion that this is guaranteed you know like thousand percent apy um you know it says look like this is the the abstraction of what that actually means um which you know if if you had an understanding of the system you know it's nothing new you're like okay this makes sense like there we go i was already computing this on on paper anyways so like now you've made it easier for me to like see it but you know that was a whole other component

where you know there's a lot of like social turmoil with that and communication issues and then like you know it's just a distraction that suddenly it's like what are we even doing because we've just spent so long like talking about the stupid migration that like you know we've kind of lost the the force for the trees yeah i mean i i think that like those are the the key things that kind of came together all at once yeah so it sounds like the narrative kind of changed or got lost when you were not involved how do you fix that or how do you think about rectifying that because it seems like this free money narrative still is like pretty pervasive

in in some parts of the community yeah i mean so i'm of the belief and like i was guilty of this myself is that you know we we had super strong consensus you know from like february or february when this was announced to to probably august or september of what this was and what we were trying to do um and i think that there was a level of complacency in that understanding that you know people would continue to understand that you know what that ignores is that you know the community grew very quickly and you have a lot of people that are coming in and trying to learn about it and unless you keep that that uh you know messaging and understanding very clear and you know it gets

passed down the chain you know it's like a game of telephone where you know you tell one person they tell another person you know you need to make sure the message stays the same every piece of the chain um you know so this level of complacency that that would continue to occur and you know with that you make less effort to make sure that every piece of the chain it goes you know like you know the message stays the same and you end up in a scenario where the like you know five people down the the line it's a completely different thing than the first guy said you know you've kind of failed the game of telephone yeah i i you know i think that that's been a wake-up call at least to me personally um and i think to a lot of the the other people that like you know

we have a lot of great like community leaders and like spokes yeah spokespeople or you know whatever that are constantly trying to educate on these things um you know i think it's been a really good wake-up call of like hey you know this is a consistent thing this is not like a one and done you do it and then you're finished like you know it's a war of attrition you know you just got to keep at it every single day you know i think like with that too you know there's this like now there's this narrative which you know like that this is a hedge fund and you know that has not been helped by like you know wonderland which has now come out and said this is what we're trying to do um and so that confuses people too in that you know prior you know they were pretty much

just like following in our footsteps and you know now they've they've switched it and you know that confuses people is still the same thing um so no like but yeah i mean i i i see right now like actively like that level of consensus and cohesion is like very rapidly returning like i'm i'm quite happy about it um you know i'm getting back out there personally um which i hope helps but you know i i don't think that like i'm the only person at this at all um you know it's definitely a joint effort by a lot of different people that are you know they have the understanding they know what like i'm of the belief that we are actively targeting what we

always have been you know it's just a matter of communicating that again and you know doing so in a very clear and open manner because you know maybe we forgot that you know you got to be doing that day in day out how do you uh do that so imagine that i'm like new in the community really excited think that this could be you know something really big um and i think that it's just like free apy risk-free profit short-term i can make a lot of money and get rich what would you say to that how do you fix the narrative okay let's treat this as like someone's listening and they want to know because that's probably what this is i try to never talk about the yield except for what it's for right so like i

personally and i've said this like many times like pretty much since we launched like i i think that it's the the least exciting thing here um you know i i felt that way from the start but you know there is a level like okay you know this is going to catch eyes and that's a good thing because you know one of the hardest things to do in this industry is just capture attention you know there's so much going on every single day that you know you know you need some way to draw eyes um but you know i i've always tried to stress like you know it's for a purpose and the purpose is not to view it in that light um you know so definitely one when talking to someone and you know going through or either explaining or just discussing like you know

don't talk about that in terms of like oh in one year it's going to be worth this much um you know it is obviously a much more complicated equation than that and you know really like it just serves a purpose like i i view it personally as like the the targeted rate of growth of the network if anything so it's not how much it will grow it's targeting um you know how much it actually does is you know determined by many factors probably chief among them being execution which is you know always the risk in pretty much everything is execution yeah plea please you know when when talking to people don't fixate on that as the the end-all be-all or purpose of this you know it's

very much not the case um you know it is a means to an end and a tool and nothing more so so zeus there's a lot to unpack here so maybe i kind of i'll try to um kind of break down what i'm taking from this in two parts so the second part is that um olympus dao um has a treasury and it manages its own treasury kind of a lot like other protocols um like yearn um and then basically there's a yield on that treasury and i mean that's kind of that's kind of the the part that we've seen time and time again in this ecosystem the first part is kind of how olympus now actually

comes to hold that money and i do view that in the very least at least as unorthodox and um i mean this is kind of this is kind of where the ponzi aspect of it comes in and basically what people um think is a ponzi basically the fact that i mean basically if if you look up the definition of ponzi it's it's it's a form of fraud um that pays profits to earlier investors or people who cash out earlier with funds from more recent investors and i i feel like there's there's not really a way to deny that that is happening here right first off just on a on a semantic level

um i just like that term you know i think that most people in d5 and crypto understand what people are getting at when they use the term but in a more traditional sense it is you know the importance of that is not so much early investors pay new investors because you can you know that's where the everything is a ponzi argument which you know i don't think is a great argument but you know that's where that comes from is that you can point to very very many things in the world and say look exact same dynamic um the what a what classifies a ponzi is generally that you are lying about what you're doing and you know like big connect where they said that they

had a proprietary algorithm to to minor trade bitcoin and we're using that to generate the returns you know that's not the case at all you know that's active deceit you know we are very very open about what we're doing like i i would very very strongly argue that that is not the case and so i don't like the the term just because you know people that aren't in the industry will look at that term and think deceit whereas the reality is that you're pointing to a mec like a mechanical thing um and you know i'm happy to to debate on that but um yeah i just wanted to throw that out there these second one so i i think a really good analog here um

is literally like bitcoin mining or pretty much any proof of work network right so to date um i actually posted like a satirical tweet yesterday about this and it went over a whole bunch of people's heads and they were firing back with like oh this is such a terrible take and i was like yeah you're right like that was the point um but you know bitcoin emits every single day about 40 million worth of bitcoin that is sold on the market to pay for mining operations to date it has sold over you know 25 billion dollars worth of bitcoin like you know at the value when it was emitted um that has been sold by miners to pay for electricity and equipment and all of

these things that you know there's no persistent value really to the network of that you know it is a expense that has to be paid just for operations that is how i view mining or bonding you know the the only difference in that relationship is that you know we have the luxury of being on ethereum a layer one so we don't have to pay for security we don't have to you know treat that as a pure expense where that money is gone immediately and never coming back instead we can store it you know that's the only difference is that we can tap into it later in the future instead of just you know burning it essentially um but you know like i don't like that argument just because like it

you know it insinuates like i would just ask like how does bitcoin work then how did ethereum spend the first seven years of its life in deeply net negative issues or positive issuance where you know it's constantly being sold on the market um you know and like you're not seeing any there's no treasury there for you like you know how does any d5 token that has pool 2 emissions work where you know it's giving out tokens for free and those get dumped on the market like you know this dynamic exists so pervasively everywhere and i would argue that olympus is probably one of the best cases of it it's one of the cases where it makes the most sense because you're actually storing that for the future rather than just burning the money away and you see no benefit beyond that single point in time you know you spend

like like sushi spent 250 million dollars last year on pool 2 incentives and where is the benefit of that today you know you don't see any benefit of it beyond the single point in time in which you gave the money out um whereas in our case we have 600 million dollars in assets now like you know essentially very similar emissions where you know we grew our supply by 87 they grew their supply by 37 and we have 600 plus times more to show for it today than you know i don't know i i think that is honestly one of the least ponzi dynamics when you really think about it in that light um because you know

every single especially in unlike defy mechanism relies on you know constant inflow of new demand to satisfy these incentives that you're pushing out for whatever activity the the last one that i was going to touch on is just uh the the early money pays or late money pays out new money dynamic in itself you can argue that at a single point in time right of like oh like price or like value appreciates and you know to to realize that you need new buyers to come into the market you know or that is true for if if price is not going to depreciate you know if you want price to be flat then you need equal new demand for the supply that's coming out of the market

again the treasury is facilitating all this liquidity where it will buy back if external parties do not um but then it has reserves as well where the dynamic that you actually see is you know early money pays new money right so if someone came in and they contributed they bought bonds and they contributed money to the treasury months ago and then they left and now the the value of the network is greater um and the treasury has to be tapped in either with the liquidity or the reserves you're having the early money pay the new money you know you flip the dynamic on intent it's actually the opposite where like i think that alone is like okay like you know i just see this argument so

much and i really don't think that it holds up yeah i would i would totally give you that um i mean what you're doing is transparent i mean it's it's not it's not a fraud um and uh basically i think i truly believe that i mean no one's forced to go into this right so i mean it's not it's not like you're defrauding investors or anything at least in my view um but yeah so basically i think the term ponzi is is uh uh yeah i i i do get your point um that um yeah it um there is a different connotation to it

in this ecosystem uh than in most uh other settings people in d5 i think use it endearingly which is like but you know it's all dangerous yeah um uh we're kind of we're running long so uh i would love to keep going but we kind of we need to wrap so um zeus what are your goals for olympus this year a couple thing i'll i'll throw some some more like intangibles and then uh some specifics you know so one of the things that we're targeting is greater and greater like liquidity influence within the the defined crypto ecosystem um you know so one of the most important components of

a currency is that it is you know the most if not one of the most liquid assets that you can find um you know so we're aggressively or uh targeting building up our liquidity influence not only in our or in our own pools but you know capturing new projects um having them pair against us um you know partnering with existing projects and having them move their liquidity with us um there's actually a new exchange that will i i don't have a date to give but um is going to take like a pretty proactive stance on helping us facilitate that um because there's a lot of upside i would consider for an exchange in you know partnering us with us in that endeavor you know there's very few projects and

entities that have any interest in like actively growing dex liquidity um besides us another one is you know i think that we're probably going to start actually or actively like utilizing um the treasury for for like what i see the treasury as being able to provide um besides those like real like tail risk bank run scenarios is that we can use it to influence incentive structures in the market in artificial ways that might be beneficial to the market so you know essentially you can have the protocol take positions that you know you don't want it to be this massive loss-losing predict or position but it's something that a a rational actor in the market probably

wouldn't do um you know the the best case and or the best like examples of this are just when you have opportunity cost so you know some some opportunity that you know still makes the treasury money but you could have taken that money put it somewhere else earned more um but you know in in manners that like i'm working on this like call strategy kind of thing where you know the protocol can uh offer offer options in a manner that would be very hard to incentivize third parties to do um but there are intangible benefits to the the protocol and allowing it to you know provide additional liquidity with lower cost um and you know provide new forms of exposure that you know are

kind of unique to our market yeah i i think like another one is just uh so we have this new bond infrastructure um and with it we can do this like you know or we're gonna see if we do this i haven't like proposed yet but what i i think i mentioned it before like net a net structure on bonds um so rather than having it one way where you have you know only the protocol taking assets into the treasury and not the other way around um you know switching it to a net based system where you know every single day it is buying a 10 million dollars worth of home and selling 11 million dollars worth of home instead of just selling one or 11 million dollars worth of or sorry what you know with that you are going to generate new activity and volume in the

market you're going to provide additional liquidity where you know let's say that that is a day where there's more supply in the market you know maybe it ends up actually you know buying back 13 million and selling eight essentially like it creates a wider band my expectation at least um of liquidity that allows volatility to compress and you know single point in time uh like supply and demand to to sort itself out better um you know it is i view it in the very in a very similar dynamic to what i was like the the water analogy with the staking rewards um where you're like diluting that dilution away um similar but with you know supply and demand of the market there's this big focus you know that

i've been trying to push on the economy of olympus um i call it the economy with an h uh between the o and the m um but you know essentially like you know for a currency to be successful it needs an economy around it you know i would like yeah you know you you need to have de-correlated finance or you need to have decorated activity happening on top of you um that has nothing to do with the currency itself you know it's just people transacting or trading or you know whatever um you know so there's this massive push within the doubt that you know there's like an incubator program and grants and like really heavy outreach to uh you know build up our our economy around us um i i would say that's probably the the

single biggest one and that aligns with like the liquidity piece really we're just trying to we're trying to spread our wings within the industry cool that's uh that's a lot of plans so where can people um go to find out more about you and olympus now yeah uh so you can go online olympusdow.finance um the twitter account is at olympus dell or there's a link on both to the discord that's like the main hub for you know community activity and you know if you have questions if you want to meet people that are in the community i would advise that that's probably the place to go i believe there's an unofficial telegram group so i won't give any out for that but it does exist i kind of want to take that back now

please make sure that you're in the right one i'm also on on that note just going to throw out like please please please never interact with people that dm you first on discord or twitter or telegram or any of these things especially if they're saying that they're a team member that their support any of these things this doesn't this is not olympus specific it's anything in d5 they are trying to scam you they will take your money do not click links do not download and open files please like the number of people that have reached out to me and said like i made one dumb mistake i opened a link and my meta mask got exploited and now i have no money like it it breaks my heart every single time like please be careful it's a dark forest out there there's a lot of people looking to take advantage

of you and you know you gotta no one is gonna look out for you except for yourself uh but at olympus dow on pretty much everything thank you zeus those are good last words thank you so much for coming on thank you