A Primer on Staking

3 min readFeb 26, 2021

You can relax, because this one is simple. Staking is the profit distribution mechanism of Olympus. It is designed as the dominant strategy for participants; the best thing to do will likely be to just stake, hold, and compound.

Let’s go over how it works:

Staking

To stake OHM, you go to our website and select “stake.” You will send your OHM to the staking contract and receive sOHM at a 1:1 basis. sOHM is a transfer-restricted rebasing token and is not meant to be traded or used for anything except holding.

Unstaking

To unstake OHM, you go to our website and select “unstake.” You send sOHM back to the staking contract to receive OHM at 1:1.

Rebase

The protocol distributes tokens by sending them to the staking contract without asking for sOHM back. This increases the ratio of OHM staked to sOHM outstanding, and results in a rebase to correct the difference.

For example: there are 500k OHM staked and 500k sOHM outstanding. The protocol produced $5k profit for the day, which it uses to mint and back 5k OHM. It sends those OHM to the staking contract; there are now 505k OHM staked and 500k sOHM outstanding. sOHM supply needs to increase by 5k, or 1%, to return to balance. So, sOHM is rebased up by 1%.

The only caveat is that rebases occur retroactively. The end of epoch 100 triggers a rebase of profits from epoch 99. This delay lets you see what you’re missing if you want to unstake or what you’ll get if you want to stake.

Conclusion

Staking is how we distribute profits equitably to participants. Through sOHM, everyone receives the same percentage profit per epoch. Rebasing also allows us to compound yield with no need to harvest or do anything except hold.

Zeus

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A Primer on Staking

Written by OlympusDAO