OHM down 90% from all-time high

OHM, the native token of the decentralized finance (DeFi) project OlympusDAO, is down more than 90% from its April 2021 all-time high of $1,415.26, according to Coingecko. As of the time of writing, OHM has lost 12% over the last 24-hours and is at its lowest price level since May 2021.

OlympusDAO is a DeFi protocol with a treasury that backs the OHM currency with the aim of maintaining a certain price floor. The DAO issues OHM tokens at a discount to investors in exchange for their cryptocurrencies, a process designed to grow its treasury over time.

These discounted OHM tokens are called bonds and users often stake their bonds on the DAO itself or use them as collateral on Fuse, an interest rate market powered by yield-generating protocol Rari Capital.

Judging by its price chart, the OHM price action has been in keeping with that of the broader crypto market with a significant rise in April and October 2021 before recent declines. But it has suffered worse than most.

The price of OlympusDAO has fallen. Image: CoinGecko.

Key to the project was an emphasis on staking. The project encouraged users to stake their tokens, locking up more of the supply and reducing selling pressure. Toward the end of last year, 91.5% of the supply was being staked. It’s currently around 85%. But clearly this was not enough to prevent holders from selling eventually.

This New Year price slump, while in keeping with the losses in the broader crypto market, has also been attributed to massive profit-taking from major OHM holders. According to data from Etherscan, one OHM holder swapped over 82,500 OHM tokens worth more than $11 million at the time. The trade happened on SushiSwap with the OHM tokens traded for the stablecoin DAI.

OHM has been on a downtrend since November 2021 and is down more than 60% year-to-date.  This price drop also meant that overleveraged OHM long positions went underwater causing a cascade of liquidations that ultimately led to further downward pressure on the token price.

Worse still, the project’s success led to many offshoot projects mimicking its tokenomics. But many of these offshoots have suffered even worse, with Spartacus down 91%, Invictus down 92%, Klima down 97% and Snowbank also down 97%.

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