As promised, I will be doing regular threads on the most asked questions related to Olympus.
The very first question comes from @archtuxfan and relates to the inflows and outflows of the protocol.
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A good start is the actual treasury, where all in and outflows can be tracked:
etherscan.io/address/0x9a315bdf513367c0377fb36545857d12e85813ef
Important to note is that these are not all the funds the treasury hold, since many are also located in protocol specific smart contracts (think Convex, Frax, Redacted, LP,..)
A more complete overview can be found on the OlympusDAO website:
app.olympusdao.finance/#/dashboard
As you can see, at the time of writing, @OlympusDAO is trading significantly below backing.
Note that, due to ever-changing treasury allocations, this overview is can be inaccurate at times.
Now, let's talk about the inflows! The main sources of income are from:
1. Bonds
2. LP (Fees, Farming)
3. Staking rewards
4. Olympus Pro
5. Bribes
Note that we don't see any premiums on assets in the treasury as income (ie. ETH appreciating). The assets in the treasury are either reserve, strategic, or partnership assets.
Olympus is not a hedge fund and will never do active trading.
Protocol outflows consist of the following:
1. Inverse bonds
2. Protocol expenses
3. Strategic Investments / DAO Swaps
4. LP Incentivization
The treasury can reduce in dollarized value due to market conditions, but since this works both ways, we don't consider it an outflow.
The most interesting of the above outflows are the inverse bonds. What are Inverse Bonds?
Simply put, it allows anyone to exchange their OHM for treasury assets through a Dutch auction mechanism.
Important to note is that the decision to activate inverse bonds as well as setting its parameters currently is under the supervision of our Policy team. In one of the next threads, I will explain how this system will be automated in the future.
Why did Olympus develop Inverse Bonds? It reduces sell pressure from the open market and allows holders to exchange OHM without affecting the price. And since Olympus owns almost all of its own LP, the effect on the treasury is almost the same.
If the price of the inverse bond is below backing, the backing per OHM of the remaining holders will increase. This can be seen in the example below where the backing is $3, the inverse bond price is $2 and the OHM supply shrinks from 3 to 2:
If the price of the inverse bond is above backing, the main benefit is that it reduces sell pressure and helps maintain the premium, which in turn is a necessity to activate bonds.
The illustration below can be seen as a summary of all different situations concerning bonds.
Another expense that is often asked about is operational costs and compensation. Compared to many DAO's of a similar size, Olympus is significantly more efficient with its resources while still being able to retain top talent.
When the markets started turning, we took the hard decision to scale back and focus on the core principles of what Olympus is building. This also meant that the operational expenses have decreased significantly by 65% from its top in December.
This shows the DAO can react quickly to changing conditions and is careful in spending protocol resources.
Olympus is building a reserve currency. Not a hedge fund nor a charity for people who hate their IRL job. I'm very proud of the progress that was made in the past months.
I hope this thread gave a somewhat simple overview of the main in and outflows of Olympus. If you like to see anything covered more in detail, please comment on this thread, and I'll try to include it in a next one!