Key points to remember
- OlympusDAO is down 25% due to market volatility.
- Since its launch, OlympusDAO has suffered from stock market crashes.
- The project has spawned many forks and has attracted both fans and critics in recent months.
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OlympusDAO has been hit hard by the recent market selloff and is quickly approaching its all-time low of $ 163 set over the summer.
OlympusDAO goes into free fall
Investors are fleeing OlympusDAO.
The decentralized reserve currency protocol is down more than 87% from its all-time high reached in April of last year amid a massive sell-off in the market. OlympusDAO’s downward trajectory has accelerated over the past week, losing 43.5% of its value. The OHM token has fallen 24.9% in the past 24 hours, currently trading at $ 183. It is around 12% of its all-time low of $ 163 set during the May 2021 stock market crash.
OlympusDAO was the first crypto project to use a circular tokenomic structure to draw liquidity. Thanks to OlympusDAO’s smart tokenomic mechanism, investors can earn outsized returns by linking assets and staking the OHM token. This so-called “flywheel” of liquidity has proven to be effective as the market momentum is bullish and has inspired many fork projects such as Wonderland Money. OlympusDAO’s frenzy peaked at the end of 2021 as various digital assets hit new highs, and by November it had reached a market cap of $ 4 billion.
However, as the May crash and more recent price developments showed, OlympusDAO seems to suffer more than other projects when the market goes down. OlympusDAO’s design has drawn criticism from many crypto enthusiasts who liken the project to a Ponzi scheme. Indeed, Olympus and other such projects need new funds to enter the protocol in order to support incentives for existing investors.
Other protocols that use a tokenomic structure similar to OlympusDAO have also been hit hard. Wonderland also suffered similar losses, down 34.6% in the past week. On Ethereum, the Redacted Cartel fork supported by OlympusDAO is also bleeding despite tripling in value since its launch in mid-December. The protocol’s BTRFLY token fell about 34% during the recent drop, but has since partially recovered.
Since the start of the year, the crypto market has been hit hard after a weak end in 2021. Bitcoin briefly fell below $ 40,000 on Monday and is down 10% on the week, but appears to have found support at current levels. Ethereum performed less well, dropping 17% weekly. The second largest crypto asset also appears to have stabilized after testing the $ 3,000 support. The latest cut follows confirmation from the Federal Reserve on Jan. 5 that it will raise interest rates, which also rocked crypto and stocks.
However, while most crypto assets follow the downward trajectory of Bitcoin and Ethereum, there are a few exceptions. NEAR Protocol, a fragmented Layer 1 network, has rebounded from temporary weakness, gaining 17% in the past 24 hours. Elsewhere, the privacy-focused Oasis protocol also showed strength, increasing by 16.5% over the same period. It remains to be seen whether these assets will continue to decouple from the broader market.
Disclosure: At the time of writing this feature, the author owned ETH, NEAR, and several other cryptocurrencies.
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