OlympusDAO are pleased to announce the official launch of the OHM-FRAX pool, as part of a partnership between OlympusDAO and FRAX Finance. Read on to learn more about what they are doing and why they are so excited.
What are they doing
Olympus and Frax are partnering for a dual-incentivized liquidity pool on Uniswap. That pool will consist of OHM and FRAX, and will be incentivized by OHM and FXS. You can find the portal to stake OHM-FRAX LP here.
Starting on Friday, Olympus will begin accumulating this pool through OHM-FRAX bonds. They will offer OHM at a discount in exchange for ownership of the pool. Our expectation and goal is that we accumulate a majority share, and continue to build up more and more liquidity, just as they have done with OHM-DAI.
Over time, Frax also plans to accumulate OHM by purchasing OHM-FRAX bonds. They believe this is the first case of a treasury-to-treasury operation in DeFi. This is an exciting way for Frax to both build exposure to OHM and increase its own liquidity. This also opens up new possibilities that we are excited to explore in the future.
Why they are doing it
Olympus and Frax are both collaborative projects building exciting products in the decentralized currency space. There are strong synergies between our projects that, if harnessed, can mutually accelerate our growth. They feel that this is only the first step in a long lasting mutually beneficial relationship.
In the case of Olympus, they can offer demand and increased liquidity for FRAX. Through bonds, they can continually grow the OHM-FRAX pool, creating a supply sink for FRAX and offering greater utility through a new offering.
In the case of Frax, they can offer demand and increased liquidity for OHM. Through treasury AMOs, they can divert new FRAX into the OHM-FRAX pool and use that LP to bond. This will thicken the pair and strengthen their market, as well as add new exposure to their balance sheet. We hope to see this assist as they safely reduce FRAX collateralization over time.
Olympus (OHM) is a floating algorithmic currency. This means that it has mechanisms to promote stability and predictablility without directly pegging to any asset. However, we take it one step further with the introduction of adjustable policy; the DAO can move certain variables up and down to target growth and profitability or stability and predictability.
About FRAX Finance
Frax Finance is the first fractional-algorithmic stablecoin protocol. Frax is open-source, permissionless, and entirely on-chain. The vision for the Frax protocol is to provide a highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets like BTC. Frax is the only stablecoin with parts of its supply backed by collateral and parts of the supply algorithmic. The ratio of collateralized and algorithmic depends on the market’s pricing of the FRAX stablecoin. If FRAX is trading at above $1, the protocol decreases the collateral ratio. If FRAX is trading at under $1, the protocol increases the collateral ratio.