The Game (Theory) of Olympus

The simplest model of Olympus has two players with three possible actions:

  • Stake (Buy)
  • Bond
  • Sell

Players are most likely to stake when they anticipate an expansion in supply and/or price. Players are most likely to sell when they anticipate a contraction in supply and/or price. Players are most likely to bond when they do not have a strong directional bias but don’t anticipate significant downside.

Staking has the effect of pushing the price up +2. Selling has the effect of pushing the price down -2. The player who moves price gets half of the benefit. Bonding has no price effect but provides a discount of 1.

As you can see, the dominant strategies are all cooperative. Both players’ staking results in 6; stake and bond results in 4; and bond and bond results in 2. Conflicting moves (stake/sell and bond/sell) are neutral. Competition (sell/sell) is the only negative sum outcome, with -6.

This is simplified to a dangerous degree. These dynamics will strengthen and weaken depending on the premium, market outlook, macro environment, and a litany of other factors. Don’t read too hard into the numbers. This is merely meant to demonstrate the positive-sum environment created by cooperation.

Working together produces optimal outcomes, so I urge you not to get involved unless you intend to stick around for the long term. Don’t be that guy who sold Bitcoin at $50 to buy back at $20. This is more like Bitcoin than you probably realize. Unlimited supply does not have to mean no scarcity.

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