The paradox of DeFi is we all want great projects that make us money, but no one wants to pay for them. Fair launch is great in spirit, but it’s not feasible in practice.
We’ve tried to maintain as much fairness as possible for Olympus. Hopefully that has been clear through the Initial Discord Offering, having a small initial supply, being open with information, and all of our other efforts to keep everyone on a level playing field.
But nothing comes free. Building a solid protocol is hard work, and it requires capital. Audits, development, legal, all of these things need some amount of money to get done. Beyond that, it requires alignment so that contributors feel personally incentivized to give it their all (as we do).
So, we held a private funding round with Zee Prime Capital, Nascent, D64 Ventures, Maven11 Capital, and a few individual investors to bootstrap development. We are very happy with this cohort. Our goal in the round was primarily to bring on funds and individuals we believe can be pivotal to the success of the protocol.
How it works
The private sale was not for OHM. We cannot pre-mine and sell the actual OHM token. If we did, we would need to take $1 per OHM sold in addition to the actual raise to make sure the tokens are backed. This would be really inefficient and capital intensive. So, how did we do it?
Through a sale of pOHM. pOHM is a precursor derivative of OHM; it gives the holder the option to mint OHM by burning pOHM and providing the intrinsic value of OHM. For example, an investor would provide 1 DAI and 1 pOHM to mint 1 OHM.
This makes it similar to an option. pOHM is worth the price of OHM minus intrinsic value, and it only makes sense to redeem it when OHM is above intrinsic value. This ensures that our incentives are aligned to keep the premium alive.
But it doesn’t stop there. pOHM is also vested based on supply. As OHM supply grows, more pOHM become available to redeem. So we don’t get an upfront payoff or an arbitrary date at which tokens have vested. We need supply to grow too.
We believe this creates the most optimal incentive alignment you could ask for. Tokens vest along with supply, and are only redeemed when we trade with a positive extrinsic value. We the team, investors and advisors, don’t only want supply to increase, or price to go up, we want both. And so do you.
Team, investor, and advisor pOHM cumulatively vest as 11.8% of OHM supply. This means that at 1m OHM supply, a maximum of 118k pOHM can be redeemed. At 10m OHM supply, it’s 1.18m pOHM. pOHM holders finish vesting anywhere from 2b to 5b supply, so this is a long term bet. There’s a lot of upside for holders, but it is dependent on actual growth of the protocol.
The breakdown is as follows:
- Team: 330m pOHM and 7.8% supply
- Investors: 70m pOHM and 3% supply
- Advisors: 50m pOHM and 1% supply
- DAO: 550m pOHM and no supply cap (community can decide that!)
These funds will be used to support the project for as long as possible so we can allow the DAO to stockpile funds and start off with a strong footing. But we still dislike that not everyone got the opportunity.
So, though we can’t promise anything because we do not control the DAO, eventually we’d like to propose a DAO offering of pOHM. This would give everyone the same opportunity as well as increase the DAO’s capitalization.
That decision is reserved entirely to you, the token holder and community member. If you think this is already too much, we won’t do it. If you believe, like we do, that this creates exceptionally strong incentive alignment that far outweighs the cost, then perhaps we will.
But all that is for the future. This is what we have already done. If you find this disagreeable or you feel like you’ve been wronged, please, for the love of Zeus, do not participate. We do not want you to feel that way, and the best solution is to not buy the coin. If you do, you’ve signed off through your actions.
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