The great fall of ZEUS — Olympus OHM and its “reluctant” child
By letterB
Greetings from DIOS Finance,
Divided by 10 times from the ATH in October 2021, the Olympus DAO (OHM) became a hot topic of discussion on the social network Twitter. With the latest news related to OHM recently, the domino effect tends to appear in everyone’s mind as there are countless OHM forks projects “born” every day in every network. Take a seat, discussions related to OHM always mention the Ponzi Scheme, so…
What is a “Ponzi Scheme”, you ask?
“A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. For both Ponzi schemes and pyramid schemes, eventually, there isn’t enough money to go around, and the schemes unravel.” — Investopedia
Red flag highlight alerts
First of all, let’s give out some comments related to high returns with little or even no risk; where will the reward come from? The cryptocurrency world is where every investment carries some degree of risk, and investments yielding higher returns typically involve more risk, that is why we always see the “disclaimer” part behind every post or article.
Secondly is overly consistent returns. Throughout history, almost everything has had its cycle, yes. Investments tend to go up and down over time and nothing will go up forever, even in love, right?
Be careful what you wish for
Virtual currencies, such as Bitcoin, or native tokens have recently gained popularity and are designed to function as a form of payment. They can be traded for traditional currencies, such as the US dollar, on internet exchanges, or used to buy goods and services, mainly online.
We are concerned that the growing usage of virtual currencies in the global economy may tempt criminals to use them to seduce investors into Ponzi and other schemes in which these currencies are used to support fraudulent or simply faked investments or transactions. An unlicensed offering or trading platform could potentially be involved in the fraud. These schemes frequently promise large sums of money in exchange for getting in on the ground floor of a rapidly rising Internet phenomena.
Fraudsters may be enticed to utilize virtual currencies to commit fraud because transactions in virtual currencies are said to offer better privacy and less regulatory supervision than transactions in traditional currencies. Regardless of whether the investment is made in US dollars or a virtual currency, any investment in securities in the US is subject to the SEC’s jurisdiction. Individuals selling investments, in particular, are usually required to obtain federal or state licenses.
DEFI 2.0 vs DAO (Down)-Trend
Shout out to Jordi Alexander for such an article, one way or another.
Carry on the story with DAO. Decentralized Autonomous Organization- One of the major features of digital currencies or DEFI 2.0 I mean, is an organization that was designed to be automated and decentralized. DAO puts transparency and publicity first as it is designed to allow investors to send money from anywhere in the world anonymously. Because there is no decentralization, therefore all participants have equal authority. This eliminates the possibility of manipulation such as traditional organizations
Although there will be some drawbacks. First to mention is bad decision, DAOs allow members to vote democratically. Many decisions are complex and academic, but many voters may not understand, or know, what they are voting on. This can lead to bad decisions because most people have no knowledge of the decisions involved. Next is delay, in addition, having to wait for a vote on adoption can have adverse consequences for the DAO. For example, in the case of Dao Maker when the market crashed in March 2020, if it still waiting for the vote to complete before implementing the measures, the property damage would be huge
Rule numero uno — start the fire by igniting people’s inner greed?
FOMO has been increasingly popular, especially in the last year, as more people sought to participate in the lucrative crypto market. DeFi is one segment that has demonstrated the benefits and costs of investing in startups. Of course, the more recent entrants into the market have every right to be wary. As a result, look into project and smart contract auditing to verify that your cash is protected wherever you go. This could be one of the factors that helps you prepare for the crypto world.
The DAO ecosystem has witnessed spectacular growth in recent times with the appearance of hundreds of new projects. The projects focus on many different areas, showing the vast potential of applying the DAO model. But to build credibility for a project and prevent rug pull, an audit seems like a good choice. Auditing- an essential key factor to any project, especially in the field of cryptocurrency, is decreasing in efficiency and prestige day by day with the appearances of countless auditing-service-companies, so accessing the service to audit a projects are getting easier and after that lengthy process, money is the fastest way to solve problems.
Recently, the needs of users as well as leading reputable audit companies require KYC when auditing to build trust to the community in general and the project in particular. But due to high cost, KYC processes tend to drain funds from firms. As more businesses join this venture, there are now more cheap possibilities. For example, the firm provides crypto wallet reporting, blockchain analytics, transaction monitoring, and crypto coverage. PEP tests are an added benefit because individuals in authority will be unable to avoid embezzlement, bribery, and money laundering, among other heinous acts.
So the question here is, if KYC is mandatory, will decentralization — an important factor in DEFI 2.0 still be maintained?
“Our Utility Roadmap Has Arrived”, seriously?
Can we get a wave back from Jade Protocol? I really don’t want to mention this hella cool project but as can be seen not by all of us, all the activities, as well as the transactions on the blockchain can be checked easily. What have you guys done with the money in the Treasury? Where does your treasury’s money go to make it zero and why was $2,5 million USD returned to your treasury a week ago? In addition, your dashboard still shows a fantastic number in the treasury which it is truly not. Such a nice joke you did but what the heck is even the Investing Treasury in your protocol by the way? We don’t even see the address for the so-called Investing Treasury that was built by this well-known project, let alone the smart contract that was created by them.
To summarize all of the points raised above, how and where does the money in these treasuries get to its destination? Were these moves made public, or did their DAO cast a vote on them? Is there any difference between these actions, which is referred to as “invest,” and cleverly generating a rug pull by fooling the majority of our loyal users?
It can’t be the endgame, we’re experiencing the process of selection and evolution
The competitor Famiglia Jade Protocol demonstrated what occurs when these reassuring statements are removed from a website! Keep this story going because when you take away this safety blanket, people fear. Their price dropped from $100 to under their $18 ‘backing’ in a flash!!
Instead, use a word like “sustainable” to evoke a pleasant sense of financial security. Is this really a long-term solution? So, if you give me $400, I’ll offer you a $1 token with an annual percentage yield of 7614 percent. Don’t bother about calculating the APY you’ll need on your $1 token to recuperate your $400.
Ohmies who want more than just a regular staking payout can receive their plebby “3.3 yields” and then use that staked Ohm as collateral to borrow more dollars and buy more Ohm to stake and borrow… This medication is referred to as (9, 9). When circumstances are good, the 9.9%ers get a higher share of the inflation yield, diminishing the 3.3ers.
Unless, of course, the price decreases. Degens loses 100% of his money when the price drops by 40%, and he has to pay enormous liquidation fees along the way.
And, due to the protocol’s design mechanisms, price decreases are unavoidable. The liquidated carcasses of those seeking out (9.9) serve as food for those on the other side, and it’s all a ticking time bomb that keeps the Ponzi Circle of Life going. They’re whoever they are.
If you think having that lump of money is enough and are starting to want to rug pull then please turn your head away, your vision is too limited. If comparing cryptocurrency with other fields, in terms of cash flow and market size, it is just a grain of sand. This visualization will help a lot in having a bigger picture.
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