The (3, 3) Gods’Father
A Masterclass on building your own Ponzi Empire; Learning the 10 cOHMandments;
Prelude
A note from Jordi:
This article is a deep dive into one of the OG crypto flash-mobs, Olympus Dao and it’s token OHM.
In 2021, Crypto twitter was littered with profiles virally spreading the concept of (3,3) staking- a perhaps well-meaning, but definitely misguided ponzi mechanic [for more on why (3,3) is actually (-4,2), see my article: Of Smoke and Mirrors, Part I].
Crazy high APY%s were advertised to the unassuming public, who for the most part did not understand that ‘rebase’ tokens like OHM had infinitely increasing inflation and were not actually creating any value.
The original version of this article was published on Jan 15th 2022, and aimed to warn the community of the dangerous bubble being inflated.
Soon after, on January 17th 2022, the bubble suddenly started to burst when one of the whale holders, shotta_sk, decided to cash out of OHM- “for his famiglia” and sent all rebase tokens down over 50% in a single day. Prices continued down only from there.
While my ‘FUD’ article initially led to online attacks by many OHMies, over time it became apparent the “WAGMI” promises community members had been given by the creators went against the basic laws of Thermo-Ponzinomics.
Though the attacks couldn’t change the underlying truth in the article, they did show a lot about group psychology around common investments and the biases that are pre-wired in us.
When such ponzi bubbles get inflated, the larger they manage to get the more brutal damage is from the unwind- for example another bubble- LUNA/UST, managed to grow 10x bigger resulting in a disastrous supernova, the effects of which will forever be felt by the space.
Over time various administrators of the project reached out to me privately, acknowledging some of the criticisms made and and seeking to improve the protocol’s marketing messages.
Although I believe the entire purpose of OHM (becoming a Defi unit of account i.e. base money) is misguided, I am pleased to see that many of the most egregious issues in the Olympus website and docs have since been cleaned up. Kudos for that.
This article has since been re-edited to be consumed as an Evergreen Memoir of the financial experimentation that was happening in those early, more innocent, days of Defi.
The ‘mafia’ theme is for entertainment purposes, and is meant to be tongue in cheek: though the creation and marketing of Olympus was certainly rife with ill-judgement and lost thousands of people their saving, it was probably more naive than criminal- especially compared to the huge scandals in the Crypto space we’ve had since.
Without further ado- please enjoy: The (3, 3) Gods’ Father.
Act 1: Kissing the Hand
Enter ‘ZEUS’- the founder of the Olympus Famiglia- a powerful crypto syndicate.
The Olympus token ‘OHM’ has successfully grown to reach a sky-high market capitalization in the $Billions.
But as other famiglias try to copy-cat its success and steal users, ZEUS seeks out disciples that can build new ponzi protocols, that then feed back tribute payment into the OHM token.
Here, have a seat.
My Consiglieri tells me you are here to seek my counsel.. that you wish to learn how to grow a Ponzi Famiglia of your own.
Very well — It is a tough business this one, but I will help you navigate it.
Be prepared though that if you succeed, you will be asked to pay tribute by buying our coin into your own treasury- As a sign of respect.
If you agree, bow down now and kiss my hand.
Good. I am now your Gods’Father.
My marketing channels will bring light to your business. I will show you my playbook end to end, all 10 cOHMandments.
But remember- If you don’t pay respect when I ask- you will be [redacted].
Act 2: Establishing a Front
The first thing you need to prioritize in this business, is that when the final curtains come down on the show, you’re not locked up in the slammer.
Retaining plausible deniability is key- so it is important to have an effective Front Organization for your business.
As you know, we at Olympus have gone with the timeless classic: our token is a new ‘Reserve Currency of the World’.
Now sure getting people to denominate their lives- their income and spending- in our Coin isn’t likely to happen. But you never know- maybe its just that we are still so early.. Good luck proving a negative!
In the meantime for us we chose to describe a ‘problem’ in the world with other Stores of Value- Dollars, BTC, ETH? None of them are a “True SoV”!
As you have seen from rival famiglias, they have established Fronts for their Ponzi business like : ‘the Reserve Currency of Defi‘ or ‘the Reserve Currency of Gaming’.
None of these actually make any sense of course- But it doesn’t matter what you go with, as long as its catchy!
So go ahead and have fun with it-
Maybe be the ‘Reserve Currency of Seinfeld Reruns’, and promise Soup For Everyone who joins and No Soup if you Unstake!
Once your Front is established, its time to start getting down to business! I have prepared our playbook with the 10 cOhmandments for just this.
Is this all misleading? Is it bad? Eh, who is really to say? Lets get to work!
To fully join the Famiglia, you must first pass an initiation. Hold your hand out for a small blood offering on this .
And as these blood drops burn, kneel down and swear an oath to the ten Ponzi cOhm-andments.
This is the code you must live your life by now, so get ready to learn it well!
Act 3: Building a Client Base
Nothing is more important to the business than building a committed and growing user base!
Lets start with Rule numero uno — start the fire by igniting people’s inner greed.
When humans feel like they are in the Land of the Plenty, their primal urge is to grab first, think later.
The 1st cOHMandment: Get absurdly high, on your APY %.
You need to tap into this powerful instinct, and the best way is through the prospect of giga-returns!
Now.. you can’t promise those returns to be in actual dollars — remember plausible deniability!
But what you *can* do is pay them in your own token, since you can print it infinitely for free! We in the business call this “Re-Basing”.
And if you’re thinking “gee ‘rebasing’ sounds a lot like ‘freebasing’ cocaine”, well the analogy is apt. Because rebasing lets us tap into user’s dopamine superhighway, by presenting them with those sweet, sweet, sky-high APY yields!
And yes just as with cocaine, the absurdly high APY is later met with a dopamine crash- the higher the APY, the higher the rate of token dilution.
But unless explicitly explained otherwise, many investors will believe that the Yield Rate and the Token Price are somehow two separate variables- that even if they get “unlucky” in price, they can make up for it in APY.
And why correct them on this? Better to blend in the crowd of legitimate projects with finite supplies that offer some yield.
Even established blockchains like Ethereum offer yield % rewards to stakers without educating users on how token dilution works!
In reality, the APY should really be called the ‘SRY’- Speed of Robbing You.
The higher the APY is, the more coins are given out by the protocol to everyone. Awesome, right?
It is in fact a PvP, with a wealth transfer from the “brave” diamond handers into those happy to sell the increasing APY rewards into them.
Whoever sells fastest into the liquidity pool makes the most, draining real assets from the pool and leaving an increasing supply of useless ponzi tokens in its wake.
So go ahead, and pour the APY gravy on thick! And if people think 1000s% of APY sounds too good to be true and ask: “ But where is all this new wealth come from?”
Well just tell them its a reward by their Gods’father for following the rules, and keeping the faith!
And once you take care of their greed, its time to take care of their fear. Calm down their inner voice that thinks its a deal too good to be true!
This brings us to:
The 2nd cOHMandment: Larp like waifu, say “funds are safu”
Terms like “Investment Protection” sound like what people are used to hearing when they deposit money at their local bank.
So tap into that heuristic as much as possible- say Funds are Safu!
Then add to this “Investor protection” strategy the crown jewel we have devised — the ploy of advertising backing!
Of course their investment is safe when it is “backed by an ever-growing, income-generating treasury!”
Here’s how it works- Out of all the dollars that come in, we set a small portion aside, say 20%. We lock these real dollars in a smart contract noone can touch and this is now our most potent fear-reducing tactic: The token can never go to zero!
Then you can keep “growing a treasury”- even though the number of tokens is growing even faster, so the backing per token stays measly.
This lets you have your cake and eat it too! There’s still 80% net profit margin to enjoy after the backing.
The rival famiglia Jade Protocol showed what happens when you delete these reassuring words from your website! Stick to this story, because people panic when you take away this safety blanket. Their price quickly went from $100 to below their $18 ‘backing’ price!
So instead — use word like “sustainable” to gives a nice aura of financial security. How is it really sustainable? Well:
It means if you give me $400, I’ll give you a token worth $1 with an APY of 7614%..
Don’t worry about doing the math on what APY you need on your $1 token to ever get back your $400.. the APY keeps going down at an uncertain rate anyway so you won’t be able to use your calculator for it.
Which bring us to rule number three!
The 3rd cOHMandment: Never Keep no Calculator on You
You know that saying about lies, damned lies, and statistics? Well those statisticians can’t hold a candle next to our mathematician Dr. Fugazi:
Lets take a look at the Olympus foundational game theory matrix we put all over our official communications:
The basis of the entire cult, sorry Famiglia, is the idea that instead of selling, the users should just keep on Staking and imagining the smell of the cannolis cooking. Green pistachio (3,3) cannolis.. Mmm.
There is now a liberty Dr. Fugazi took with the math here. Just a small assumption made that there are new suckers, sorry I mean users, willing to join at ever higher prices.
Yes some Smarty Pants like this Matt Levine who works for Mafioso Bloomberg might say that the math Dr. Fugazi did here isn’t true- that (3,3) is more like (3, 3, -6) in reality.
But remember people just want to believe! And what (3, 3) lacks in Truth, it makes up for in Truthiness. Here’s a perfect example of Truthiness-
The premise of our Famiglia business is that stakers can sit back and enjoy life as they (3,3), and not worry about others dumping on them.
How do our official Docs make the claim that stakers are protected and end up better off in a bank run by not selling?
Well instead of assuming rational players who only sell until the backing price, they take the extreme example of people selling way past it, and only 1/30th of users still staking.
These last holders in this fictitious scenario do end up owning the entire treasury and being at a profit. Admittedly, Dr. Fugazi went a bit too far with this one, and hopefully this skeleton in the closet doesn’t get found.
Sometimes its hard to control passionate team members from exercising their talents.
But passionate users are what can make or break you-
The 4th cOHMandment: Mint millionaires fast, and their loyalty will last
A good investment as you are starting your Ponzi business it to make some early investors extremely well off!
Their success will not only help spread the word of riches to be found, but will also keep these users as engaged mascots for the community.
For example lets say you have 5,000 people that invest $10,000.
That’s $50 million. Design the mechanics so that the first 100 people get a quick 10x on their money. A pricey but worthwhile $10 million investment for further growth!
These 100 people will be living, walking, and tweeting proof, that your protocol generates massive wealth for plebs that come aboard!
Even better, most of these will be so appreciative that they will not even cash out these paper profits.
By “borrowing” the other people’s money to create success stories, you have also created an additional benefit-
These rebels will be faithfully defending the Famiglia against any one who speaks ill of it on social media. They will evangelize harder for you than any employee could!
For this is the difference, between soldiers that are paid, and rebels that fight for a cause.
Act 4: Playing the Long Con
So if you’ve followed my advice so far, you will have gotten users and created a juicy looking business for yourself.
Congratulations- but now you must learn the how to keep the game going for a long time and extract us much value from what you have built.
The 5th cOHMandment: Never let ’em know, how much pOhm you hold
Since we are throwing such a good party for everyone and doing all the work to bring the new ‘customers’ to sell to, surely we should be able to keep some Cannolis for our service, no?
At Olympus we named our Cashout Cannolis “pOhm”.
This was a.. ‘special’ token, announced for legal disclosures but never actively mentioned or discussed to users. After all, why discuss it when these tokens are only reserved for insiders and they can’t get their hands on them anyway?
How it works? For every $1m of market cap into OHM, we get An $118,000 cut off the top- now *THAT* is one spicy meat-a-ball!
And do you wanna know another Famiglia secret? One that even some of our senior Capos dont realize?
As originally designed, the incentive for pOhm is not to HODL with the community, but rather to dump on users when the market cap goes up!
Since pOhm costs $1 to exercise, it is actually better to dump it sooner before the price gets diluted. If the team waits too long and the Ohm converges to its intended price of $1 as per its mechanism, they actually end up with worthless pOhm call options!
That’s how you never let them know how much Ohm you truly hold. Badabing, badaboom. It’s just business Sonny.
The 6th cOHMandment: Utility? Dead it. You think a degen cares? Forget it!
The reason for $OHM’s existence is supposed to be to add utility as a Store of Value by being better than both the Dollar, and BTC/ETH. But that endgame is hard, and all that matters to people is the story.
Sure, one can have ideas on how to improve the world, but a real Chad knows- It’s not about how much utility you add, it’s about how much you’re worth.
No ideas. If you have ideas, people will find flaws and it will never be enough! But if you have no ideas, you can say you’re ‘pre-ideas’… you’re a potential pure play.
So say you’re a ‘flatcoin’ — but without giving any actual suggestion on what basket to peg to. Pure play.
Say you will set better monetary policy better than the central banks without any ideas on how. Pure Play.
If someone asks, say its by using the collective wisdom of 1000s of DAO members, most of whom couldn’t explain a ‘Repo rate’ from a ‘Repo Man’.
If you do go the utility route, you’ll end up just like your virgin competitors.
Take a look at Reflexer Labs- those virgins have been trying to tackle the same stablecoin problems for years with “ideas”- and now they can’t even afford to buy a Kia Sedona from Jay Peg’s Auto Mart:
Instead, if you feel the itch to innovate on something- do it by upping the gambling stakes to new levels of degeneracy for your user.
For the extra degens out there, create utility by giving them the chance to take on even more risk in adrenaline pumping ways.
Sad as it may be if we don’t offer them these crazy gambling games, they will just go to a rival gang’s casino. I mean, have you seen the kind of crazy APY’s they’ve been offering? Gajillions of APY %!
So we have to deal in the hard stuff too. And heroin for crypto degens means leverage! So we opened up our turf to the neighborhood loan shark TetraTurk to sit by the street corner, offering Ohmies some degen ‘free-basing” crack.
They call this crack (9,9) and it levers up your yield APY to even more extreme heights! When times are good, user can getting a larger part of the inflation yield, diluting out the less degen (3,3)ers.
Until of course the price falls. A 40% drop in the price results in a full 100% loss for degens- And the price drops are inevitable, as per the protocol rebase design.
It’s all a ticking time bomb that sustains the Ponzi Circle of Life- the liquidated carcasses of those seeking out (9,9) serve as food for those on the other side.
The 7th cOHMandment : Memes and Airdrops, is the daily routine
When their empire started to go downhill, our wise ancestors the Romans kept the game going longer by giving the plebs some Bread and organizing Entertainment in the Colosseum.
The Web3.0 equivalent of ‘Bread and Circus’ is ‘Airdrops and Memes’!
Creating tokens or NFTs out of thin air takes little more than a few mouse clicks.
So get an artist to make you some funny Pepes with togas on, get youtubers to make videos about you, and remember to keep pressing on the biggest meme of all — Stratospheric APYs!
Psst. Hey buddy. Buddy buddy buddy! You want to increase the size of your APY? You can increase up to 40000% in a month bro. Trust me its all natural, my friend’s a doctor.
The 8th cOHMandment: Dont pull the rug, just hide losses under it
Playing the Long Con is admittedly not as exciting or spectacular as those crazy Korean gangs doing Squid Games over on the West Coast.
But keeping the game keeps going for longer yields more cannolis in the end for the famiglia that a quick rugging.
The challenge is that pesky 2nd law of Thermo-Ponzinomics- the Entropy Losses are always increasing in the protocol:
Gas Fees
Opportunity cost of the capital locked up.
Bots arbitraging Olympus bond discounts.
Other bots sniping the Liquidity Pools.
The truth is ‘Protocol Owned Liquidity’ leads to ‘Protocol Owned Losses’, but this can be silently swept under that Rug instead of pulling on it!
The 9th cOHMandment: Spaghetti at the wall, postpones a downfall
While Olympus and its forks sit around waiting to become a reserve currency of the world/defi/gaming/seinfeld there’s plenty of time to cook spaghetti to through at the wall and see if something sticks.
Flavors of the month could be NFTs, become an incubator for startups, being a VC DAO, and cross-pollinating tokens with other token treasuries!
If you ever need more ideas for spaghetti recipes, you can check the never ending list of partnerships and initiatives our chefs have cooked up in the past-
Amongst them- solving climate change with carbon credit lockups, achieving checkmate victory in the Curve Wars, and solving all of crypto’s fragmented liquidity problems!
The 10th cOHMandment: If forks don’t pay, attack them all day
And finally the last rule you need to remember- perhaps the most important of all.
Just like a vampire, the only way for a big bloated ponzi to stay in business is to feast on young blood- the forks and spinoffs that emerge need to do their part and pipe in some of that fresh cash into supporting their OG token’s price.
As you build your empire with my playbook you need to keep your promise and continue to pay tribute to your Gods’Father.
Otherwise, betrayal will meet the full wrath of Zeus!
Closing Credits- Where are they Now?
- The OHM token, down 99+% from its High in 2021, continues its descend towards $1 as it starts to become the same as the stablecoins it sought to replace. The OHMie who diamond-handed at the highs because he wanted to buy a Lambo ended up getting one, albeit a bit smaller.
- GOHM, the new governance token doesn’t rebase so is only down -91.5%. The stablecoins locked up in the protocol prevent the token from complete 0, so the last remaining Ohmies proudly proclaim that “What is dead may never die!”. The chart still looks like death though:
- Dr. Fugazi took the bankroll he built working for the Olympus Famiglia and spun it off into an underground Sports Betting empire, running numbers for the Rollbit Cartel. He lives in the outskirts of Mexico City with 5 French Maid Latinas serving him and orders Del Taco to be delivered to him daily from across the border. Fugazi has become a multi-millionaire but is fighting obesity.
- The Official Docs have cleaned up the APY marketing sins of the past. Which is great!.. though the new marketing concepts of ‘Range-Bound stability’ and ‘Reverse Bonds’ have been responsible for over 50 hospitalizations from people falling asleep into their keyboards from the induced boredom.
- “Zeus” continues to lead the OHMies on the never ending path in the search of Reserve Currency status. Having just recently turned 21 years old, Zeus continues to ‘Meme and Dream’ of Protocol Owned Liquidity. While his count of disciples (and twitter followers) have completely stagnated since the price bubble was burst, Zeus continues unabated on his crusade to save the world.
