Olympus DAO

When markets crashed again, Olympus demonstrated the stability it was designed to provide. The protocol's mechanisms functioned as intended during the downturn, maintaining its core operations. **Key Points:** - Olympus protocol operated according to design during market volatility - System maintained stability through built-in mechanisms - Demonstrates practical application of decentralized reserve currency model The event showcases how DeFi protocols can respond to market stress through automated systems rather than centralized intervention. [Read the full analysis](https://olympusdao.medium.com/when-markets-crashed-again-olympus-did-what-it-was-built-to-do-5fa4040b3bb2)

A decentralized reserve currency's backing floor mechanism proved effective during a recent market downturn. **Key Performance Metrics:** - Price declined 15% - Backing value moved only 0.3% - Backing premium absorbed 98% of the drawdown The backing floor differs from traditional pegs by relying on real, liquid assets that remain available regardless of market conditions. Unlike pegs that can break under pressure, this asset-backed approach provides a tangible foundation for price stability. This event demonstrates how treasury-backed mechanisms can cushion volatility while maintaining protocol integrity through actual reserves rather than algorithmic promises.

**Market participants responded to recent price movements by increasing their positions.** - CD strike prices adjusted programmatically from $22.99 to $19.71, representing a 14% decrease - Deposit volume increased 5.7x as users secured entry points at the lower strike prices - The price adjustment mechanism responded to market conditions automatically The automated repricing created conditions that attracted increased capital deployment from market participants seeking favorable entry positions.

The Yield Repurchase Facility (YRF) demonstrated its autonomous stabilization capabilities during recent market volatility. **Key Performance Metrics:** - Protocol automatically increased OHM buybacks as prices declined - Buyback activity peaked at 980 OHM on February 1st - Capital efficiency improved as premium compressed **How It Works:** The YRF evaluates weekly yield from protocol reserves and Cooler Loans interest, then creates bond markets through Axis Finance to bid OHM for USDS. Acquired OHM is redeemed at 11.33 USDS to maintain proper collateralization. This mechanism acts as a countercyclical force—buying more when prices fall and less when they rise—without manual intervention.

**Market-wide correction triggers OHM protocol stress test** A broader cryptocurrency downturn led to cascading liquidations across protocols built on Olympus (OHM). As Bitcoin and Ethereum prices fell, leveraged positions began unwinding across the ecosystem. **Key developments:** - External protocols layered on top of OHM experienced liquidation cascades - Peapods (external layers built on hOHM) were particularly affected - Falling collateral values created a domino effect of position unwinding - Concentrated selling pressure hit the OHM spot market - The protocol's defensive mechanisms are now being tested under real market stress The situation highlights the interconnected risks in DeFi protocols, where leverage and layered products can amplify market movements in both directions.

**Zero Liquidations During Market Stress** While external DeFi protocols faced significant pressure, Olympus's Cooler Loans infrastructure recorded **zero liquidations**. **Key Features:** - Backing-based LTV (loan-to-value) system - Fixed 0.5% interest rate - Designed to prevent reflexive selling during market downturns The protocol's unique approach to lending demonstrates resilience during volatile market conditions, contrasting sharply with traditional DeFi lending platforms that experienced liquidation cascades.

**Liquidation cascade hits OHM-based protocols** External protocols built on top of hOHM, known as Peapods, experienced a wave of liquidations as collateral values declined. The unwinding created concentrated selling pressure on OHM's spot market. **What happened:** - Broader market correction in BTC and ETH triggered leveraged position unwinding - Liquidation cascades spread through external protocols built on OHM - Selling pressure tested the protocol's defensive mechanisms The event highlights the interconnected risks when external layers are built on top of base protocols. The protocol's defensive systems were put to the test during the concentrated selling period. [Read more about OHM's protocol mechanisms](https://www.olympusdao.finance/)

**Market Performance** OHM declined 15% during the recent downturn, matching Bitcoin's performance while significantly outperforming Ethereum's 26% drop. **Key Metrics** - Zero liquidations recorded despite market volatility - Buyback activity tripled compared to normal levels - New capital inflows surged to 6x typical volume The absence of liquidations suggests strong position management among OHM holders, while increased buybacks and capital inflows indicate continued confidence in the protocol during market stress.

**OlympusDAO's Convertible Deposits proposal is now live** with voting beginning in 3 days. **What are Convertible Deposits?** - Transform idle stablecoins into productive, flexible capital - Preserve stability while offering conversion options to $OHM - Users receive receipt tokens and conversion rights when depositing stablecoins **Key Features:** - Receipt tokens can be used as collateral or traded - Conversion rights allow purchasing $OHM at predetermined prices - Provides liquidity without exiting positions **Benefits for different users:** - Stablecoin holders can earn yield and access liquidity - $OHM supporters lock in fixed conversion prices - Traders can capture arbitrage opportunities The proposal aims to activate idle capital while reinforcing the Olympus treasury. [Cast your vote](https://app.olympusdao.finance/#/governance/proposals/12) | [Learn more about Convertible Deposits](https://olympusdao.medium.com/convertible-deposits-8dee6537932b)

**Olympus has deployed $10M from its treasury into sUSDe** following a successful governance vote. This strategic move aims to: - Strengthen Olympus backing through diversified assets - Generate returns for the protocol - Deepen collaboration with Ethena Labs **Key security details:** - Ethena confirmed USDe overcollateralization with ~$66M buffer - Independent third-party verification completed - Focus on transparency and sustainable DeFi growth The deployment represents Olympus's continued evolution toward **purpose-built treasury management**, moving beyond idle assets to strategic yield generation. [Learn more about Olympus](https://docs.olympusdao.finance/)