OlympusDAO intends to make OHM a Liquid Asset within the Balancer Ecosystem

• OlympusDAO plans to establish OHM as a liquid asset within Balancer’s network, with CopperLaunch and PrimeDAO assisting.

• OlympusDAO, a decentralized financial system, cooperated with Balancer to establish OHM as a liquid asset within the latter’s network. 

• CopperLaunch and PrimeDAO will make the front end of Liquidity Bootstrapping Pools (LBPs) easier by including OHM as a collateral token.

The Project with a special objective

According to a statement obtained by CryptoPotato, OlympusDAO, the decentralized reserve currency protocol, would first deploy $50 million in liquidity to the Balancer Protocol. The initiative’s structure focuses on the entry point to OHM via DAI and WETH (wrapped ETH), with the primary purpose of decreasing the price effect. As a result, it was concluded that a 50/25/25 OHM/ETH/DAI Pool would be the best choice to provide to the Olympus community.

The maximum treasury distribution will be $25 million OHM and $12.5 million DAI and ETH. The Balancer liquidity pool should boost OHM’s network effects by earning trading fees and enhancing the process’s value.

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Establishing OHM as a liquid asset on Balancer’s ecosystem results in an LBP financing scheme, which supports the OlympusDao network hugely. Approved DeFi protocol users would be able to lend OHM through it.

Finally, the partnership is expected to contribute positively to the DeFi ecosystem. As a consequence, one could conduct balanced transactions and create pools of several tokens that function as a personal index.

Balancer’s special flexibility is on full show

In this partnership, Balancer’s special flexibility is on full show. On Balancer, $OHM liquidity may be aggregated with both exchange assets (WETH and DAI), potentially resulting in a 25% price effect improvement over fragmenting liquidity over two independent pools of OHM-DAI and OHM-WETH.

When compared to a 50/50 constant product AMM, Balancer’s invariant AMM enables considerable customization. Balancer allows you to provide any weighing between 1 and 99 percent to multiple tokens. When looking for the lowest price effect for swappers and the least amount of IL for OlympusDAO as the LP, a 50/25/25 weighting was the best structure.

Solution for liquidity management

The migration of $OHM liquidity to the Balancer Protocol serves as a case study for any enterprise that controls its liquidity on a decentralized exchange or encourages liquidity on a DEX.

Balancer Weighted Pools’ versatility and customization, together with the usability of Balancer Protocol products such as LBPs, give a one-stop-shop solution for liquidity management.

It is feasible to solve for more than only price effect, and this may be done in combination with decreasing liquidity fragmentation.