gOHM is the governance token of the Olympus DAO.
gOHM is a low-cap asset with questionable collateral reserves. This asset is exposed to the underlying risks of Olympus and Polygon PoS bridge, which are protocols both rated as Watch out.
gOHM has an uncapped supply. gOHM is exposed to death spiral risk as its price depends on another asset, thus creating negative feedback loops.
gOHM is moderately correlated to the overall market.
Polygon PoS Bridge
OHM strives to be the first decentralized reserve currency that is free-floating and not pegged to the USD. The token also serves as the protocol's governance token. Users who buy OHM can either hold it, stake it, or provide liquidity to the OHM-DAI liquidity pool. Simply holding OHM does not provide any advantages as the token will lose value through its inflationary rebasing mechanism. Users who stake OHM for sOHM receive rebasing rewards that compounds rewards over time. Lastly, users can pair OHM with DAI to create a liquidity provider (LP) token that can then be bonded through Olympus in exchange for discounted OHM tokens.
The early token supply consisted of 50K OHM sold through an initial Discord offering at a price of $4 per OHM. Subsequently, an initial DEX offering on Sushiswap sold another ~18K tokens, bringing the total supply to around 68K OHM. The emission schedule for OHM is highly inflationary in the early stages to bootstrap growth and expansion of the token supply. Inflation occurs when the price of OHM is greater than 1 USD; the protocol uses a bonding mechanism where users exchange desired assets like DAI and OHM-DAI LP in exchange for discounted OHM. Each OHM has a price floor of 1 DAI, which means that OHM can continue to be minted based on the amount of DAI in the treasury. The newly minted OHM are 90% distributed to stakers and 10% to the DAO. The opposite occurs when OHM is below 1 USD; in this case, a supply reduction occurs via an inverse bond where users sell OHM back to the protocol at a premium in exchange for DAI or OHM-DAI LP. The returned OHM is then burnt to reduce the token supply and drive price back to parity.
OHM accrues value as its treasury of assets grow through its bonding mechanism. Olympus bonds are a relatively new financial primitive within DeFi for protocols to acquire its own assets and liquidity in exchange for discounted governance tokens. Bonds are a pricing mechanism between two tokens that do no rely on third-party oracles. Instead, the bonds are priced internally by supply and demand by offering a variable discount rate to users. Bonders commit a capital amount upfront in return for a fixed return at a future set point in time (paid in OHM). Bonds are the primary mechanism for Olympus to grow its treasury and network over time through expansion of the OHM token supply. The treasury represents all assets that are owned and controlled by the protocol itself, or also referred to as Protocol Controlled Value (PCV). More bonding by users leads to a higher treasury value, which then increases the liquid backing per OHM.