Olympus DAO cuts annual yield for OHM staking to 7.35%

Olympus DAO has cut the OHM token’s annual percentage staking yield to 7.35% in the hope of making the protocol sustainable. The rewards were reduced after the DAO approved a governance proposal called OIP-119. 

In a Thursday Twitter thread titled “Say bye to high APY,” the project clarified that while the DAO’s prior objective was to bootstrap adoption by offering very high yield, it’s transitioning to a new tokenomics framework.

Olympus DAO is a DeFi protocol with a treasury that backs the OHM token. It has a two-pronged approach to its operations, according to its website. The first is via cryptocurrency bonds denominated in vested OHM tokens. Here, the DAO issues OHM tokens at a discount to investors in exchange for their cryptocurrencies, a process designed to grow its treasury over time.

The second is single-side staking of OHM tokens. Currently, the official website shows this yield to be 267% APY, paid to those who deposit OHM to its single-side token staking pool. 

After the latest governance proposal, this specific staking yield (also called “base rate”) will be lowered to 7.35%, the DAO said. This change will help the project achieve more sustainable growth, the DAO explained.

OHM market capitalization chart. Image: CoinGecko

Six months into its launch, in November 2021, the market capitalization of OlympusDAO’s token OHM skyrocketed to more than $4.3 billion. The token's market cap has since declined 93% to $293 million, according to CoinGecko.

Currently, Olympus has over $266 million in crypto assets from user deposits. The DAO manages these funds as a protocol-controlled treasury to back the OHM tokens as well as fund its operations.