Ponzi scheme? Demystifying the value support of the decentralized central bank Olympus DAO

Last year, many analysts said: DAO will definitely explode in 2022, and it has not really taken off. The explosion of various DAO projects in early 2022 is confirming the prophecy.

Just recently, the DAO ecosystem created by Olympus started to attract attention. As a DeFi project, Olympus' DAO system is a unique existence.

The implicit goal of decentralized finance is to replace the existing financial system with trustless peer-to-peer protocols. So far, we've seen decentralized exchanges, decentralized lending, and even decentralized insurance. However, a decentralized central bank is always lacking in the market. The emergence of a decentralized central bank will issue a decentralized currency. This is also the original intention of Olympus DAO. Next, we will analyze the self-worth and development prospects of Olympus DAO, and discuss its potential from its operating mechanism.



Who made the Olympus DAO?

Olympus DAO was founded by an individual who goes by the pseudonym Zeus.

Ponzi scheme

Unlike most other anonymous figures in the cryptocurrency space, Zeus has given numerous interviews and has appeared in numerous DeFi panel discussions. Despite his frequent appearances, not much is known about Zeus, other than his background in economics and game theory. There are also rumors that he is much younger than his stated age, but this may just be an internal rumor from the Olympus DAO community.

In a recent interview, Zeus explained that he entered the cryptocurrency space in early 2018, at the peak of the previous bull market. After a bear market, Zeus turned his attention from cryptocurrencies to decentralized finance, which took off in the summer of 2020.

Ponzi scheme

The DeFi project that led Zeus to re-enter the crypto space is Ample Forth, an algorithmic stablecoin that automatically adjusts its supply in response to demand. This makes Zeus wonder if it's possible to create a decentralized currency that people are willing to spend, rather than one that people can save. This is a small but important detail.

According to Zeus, most cryptocurrencies are not currencies. Cryptocurrencies like BTC, ETH, LTC are more like assets and are defined economically as assets that are used as a store of value like gold. On the other hand, cryptocurrencies like stablecoins are currencies because they are used as a medium of exchange rather than a store of value. The only problem is that most stablecoins are centralized, and almost all of them are pegged to the US dollar, which is technically devalued day by day due to inflation.

In Zeus' view, the only solution is to create an entirely new stablecoin. In December 2020, Zeus combined what he believed to be the best elements of existing DeFi protocols, algorithmic stablecoins and decentralized stablecoins to create the first decentralized reserve currency called OHM. Olympus DAO, the protocol for issuing this decentralized reserve currency, was first revealed through the media in February 2021.