In recent days, observations of the altcoin portfolio of American billionaire Mark Cuban have shown his growing interest in the relatively niche cryptocurrency OlympusDAO.
But what is OlympusDAO? Read on to find out more.
The Push for algorithmic stablecoins
The project aims to create an algorithmic decentralized reserve currency that maintains its long-term purchasing power outside the world of fiat currencies or real commodities.
This is a symbol of moving away from traditional stablecoins-currencies that are pegged (often in the proportion of 1:1) to a currency such as the US dollar. There are almost 40 billion US dollars worth of tokens in global circulation.
Although many have argued that cryptocurrencies like USDC and Tether have provided liquidity to the crypto asset space and acted as an important bridge to the world of traditional finance, other commentators are not so optimistic.
Critics emphasized the fact that the value of stablecoins by their nature fluctuates depending on the value of the real fiat currency, and argued that therefore they can be subjected not only to inflation, but also to interference and verification by national regulatory and legislative bodies.
Thus, there was an impulse to develop an algorithmic stablecoin that can achieve stability and maintain purchasing power over time, but at the same time will not be exposed to the risks that a link to a fiat currency carries.
As a result, there was a project aimed at solving the problem of inflation, which is faced by various regions of the world.
The minimum price of OlympusDAO is supported by DAI
Although the price of the OMH token from Olympus will not be stable, this cryptocurrency has a long-term minimum price equal to the price of its reserve currency or several currencies.
So far, DAI is the first and only reserve currency of OlympusDAO, although others could be added.
DAI is one of the first currencies in the field of decentralized finance (DeFi), which has become widespread, and is a stable cryptocurrency running on the Ethereum blockchain, which seeks to maintain its value as close as possible to 1 US dollar using an automated smart contract system.
Thus, when the price of OlympusDAO falls below that of DAI, the protocol buys and burns OHM tokens to reduce the supply and increase the price.
Mark Cuban has locked up 75 OlympusDAO that he bought over the weekend, bringing the total amount of OMH that he blocked in order to receive a reward to 536.
The 62-year-old trader will undoubtedly hope that his latest investment will bring more benefits than his previous ones in TITAN. The DeFi cryptocurrency, in which Cuban invested, sank by almost 100% in a few hours last month.
By the middle of the day, OlympusDAO was trading 1% higher, at the level of 575.12 USD, which is significantly lower than the historical maximum of 1479 USD, but significantly higher than the May low of 164 USD.
Aaron Arnold, a leading Altcoin Daily and cryptanalyst, in June named Olympus DAO (OHM) one of the top five low-capitalization cryptocurrencies.