High APY Crypto Opportunities

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Disclaimer: Crypto is a fast-paced economy and things change quickly. Information on this post might be outdated even if written today. Do your own due diligence and stay safe. I might get affiliate commissions for purchases made through links in this post. Read the disclosure.

Alpha Gained:

Olympus DAO

Every high APY (annual percentage yield) project you see out there in the markets today are all more or less copies of the Olympus DAO a.k.a forks. However, for us to understand the reason for these forks, we have to understand what exactly Olympus DAO is. 

Olympus DAO’s primary goal is to become the decentralized reserve currency. A treasury of sort, that acts (kind of) the same way as the U.S treasury. Except in Olympus’s case, the treasury is owned by the people and governed by the people. So there’s no single entity or a small group that makes hefty decisions. Every decision is voted and thus the governance of the OHM token is kept in people’s hands.

So why is this such a big deal? That’s because, with OHM, you can create a wealth management system, where you earn an asset with a lucrative yield, and that asset does not have inflation the same way like current paper money has (as it’s not backed by anything) as every OHM that is created or minted has an equal amount of backing. OHM is backed by DAI, but not pegged to DAI.

Each OHM is backed by 1 DAI, not pegged to it. Because the treasury backs every OHM with at least 1 DAI, the protocol would buy back and burn OHM when it trades below 1 DAI. This has the effect of pushing OHM price back up to 1 DAI. OHM could always trade above 1 DAI because there is no upper limit imposed by the protocol. Think pegged == 1, while backed >= 1.

Olympus would like to become a global unit-of-account and medium-of-exchange currency. To get there without external funding, they need a lot of capital and that is created by people bonding DAI, FRAX, wETH, or other assets to the protocol, getting a discounted OHM, or they can buy OHM and stake it to the protocol. This all creates a DRC (decentralized reserve currency) for the people to use and own. Bitcoin can’t do the same thing as the value can drop below $1 (though highly unlikely) and thus owning Bitcoin might not be preferable.

Forks

A fork is a copy of another protocol, transformed to its own protocol, using the same underlying code. The reason why you see so many high APY projects popping up like crazy is that the underlying code is the same. More than often (if not always) it’s based on the Olympus protocol. What makes the whole protocol creation so fluid and innovative is that the code used in Olympus is open source and so anyone can create their own protocol by just copy-pasting it to their own use.

Epochs

The reason why epochs are relevant and important is that they determine the rebase of the rewards. Epoch is an era of time within a blockchain. Usually, it’s the time in which blocks are finalized in a blockchain. In the case of the Ethereum epoch is the time in which 30,000 blocks are finalized to the blockchain.

Rebase

Rebase is the time in which a reward is distributed to the stakers. In Wonderland, the rebase happens three times a day. Creating an epoch of 8 hours. Rebase means creating a new base level for the next reward yield. It might stay the same, it might change a bit, but the rebase function creates a new base level at which you will be rewarded.

Dilution

In traditional economics, dilution is the event where new shares are issued or created. This can have a negative impact on share prices. In crypto, we tend to talk about a fully diluted market capitalization. The fully diluted market cap is calculated by taking today’s price and multiplying that with the total supply of the token.

With Bitcoin, the current market cap would be the amount of BTC in circulation X (times) the current price of BTC. The fully diluted market cap would be 21M X the current price of BTC.

So when we think about dilution in the case of Wonderland. Dilution is increased when new TIME tokens are created/minted, however, we have to remember that there are always finite amounts of TIME tokens (521,844.022587) in circulation, and thus the TIME tokens in that sense do not suffer dilution. Dilution might happen when people own TIME but for some reason haven’t staked TIME, creating a situation where TIME is traded rather than locked to the protocol.

Also creating the very reason why the high APY is there so that people wouldn’t just own the token, trade the token, but keep it at the protocol to earn massive yield for it. Creating a situation for the game theory 3,3.

Runway

The runway is basically the number of days the treasure can hold the high APY. The runway is formed by the PCV (protocol controlled value), which in other words means the treasury. The more assets and wealth the treasury has, the more runway the protocol has, and the longer the high APY is guaranteed. Meaning that if you see a value e.g. 400 days, it means that the high APY is guaranteed to the stakers for 400 days. Meaning that we don’t have to worry about the high APY dropping before 400 days have passed

The reason why the high APY and the long runway are possible is that the treasury has gathered so much profit from minting fees, interest-bearing assets, and liquidity pool fees among other profit-making mechanisms. This creates security for the stakers to keep their holdings staked and inside the protocol.

Emissions

Emissions are the rate at which new tokens and coins are released. Emission is critical for a tokens price as more tokens or coins are released as staking rewards, farm rewards, etc. The more tokens and coins there are in circulation the less valuable your token is. However, if the supply and demand of the token are in balance then it can create a value increase in price. So there should more than likely be a burning mechanism in place, to control the supply of the token.

When there’s only supply in the form of different rewards, the higher the inflation rate. So in this sense, the way Bitcoin works is a wonderful example as per every halving, the BTC rewards are slashed 50% from the previous value. Creating less and less supply for the market to own, thus creating the effect of ‘store of value’.

In the case of Wonderland and Olympus, the goal is to keep the OHM and TIME tokens staked. When the tokens are staked, they are off the circulation, creating a higher price for the tokens if the demand stays the same. In these two protocols, the emissions are born from two different events, staking rewards and bonding. When all the TIME in circulation is staked, then the only way for a new TIME to exist is these three methods:

  • TIME is minted and distributed to the stakers.
  • TIME is minted for the bonder. This happens whenever someone purchases a bond.
  • TIME is minted for the DAO. This happens whenever someone purchases a bond. The DAO gets the same number of TIME as the bonder.
Value_of_USD_value_of_OHM_value_of_TIME
The value of USD, the value of OHM, and the value of TIME

Backing Value

Backing price or backing value is the value at which the TIME protocol will start to buy back TIME (manually) and burn TIME to increase the price back up again. Backing value is kind of the price that the token can not fall below ($1 being the “true backing value”). However, even with a $1 valuation, the token would still be insanely good as that is the lowest price it can ever go, and getting a high APY for the token would make it a supreme wealth creation machine.

Even if the backing value drops and the runway hits zero, even then the TIME would be backed by MIM and have the $1 value, simultaneously creating a situation where the TIME tokens APY hits ATH and just keeping the TIME token would still make you a lot of profit in a long term. However, the very key here is to stay staked long term. Short-term fluctuations and price drops are all covered later on, when the compounding kicks in, in the long term time horizon, let’s say in 9-12 months.

Example: After 350 D, you might have roughly 770 TIME tokens and if it’s priced at $500, then the portfolio would be $385,000. However, when 1-day passes and the APY is roughly at 50,000%, you would get roughly 10-15 more TIME tokens, meaning you would make $5000 in 1 day. Only by believing in the project and letting it do its magic.

staking_time_and_auto_compounding
Auto-compounding TIME token

$TIME Token And Next Level Wealth Creation Example

Initial Investment: $8,000 / 1 TIME token
Current APY: 50,000%
Future $TIME Price: $500
After 120 D You Would Have: 7.709864 TIME
Profit/Loss: $3,854.93 – $8,000 = -$4,145.07
Break even at: 163 D
After 300 D You Would Have: 165.050516 TIME
Profit/ Loss: $82,525.25 – $8,000 = $74,525.25


By this time you would make roughly 2.833342 TIME/day, which would be:
$1,416.67 / day
$42,500.10 / month

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Written By Juha Ekman

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