Highest Passive Income in Crypto!
+244,177% APY and higher offered by forked OHM (DeFi) projects
There is a new player in the DeFi space and it has been around for just over a year. It uses a mechanism of acquiring its own liquidity (instead of renting it like with yield farming) and through this mechanism able to offer absolutely outrageous yield rates — in the many thousands of percentages!
To put this into perspective, my traditional bank account offers a high-interest rate of 2.2% per year. These projects are offering comparative interest rates in the tens of thousands of percentages per year.
What is APY?
Before diving too deep, let’s get clear on what APY really means and how it is different from an interest rate. At your local bank and online you are likely familiar with the term, “interest rate”. However, these DeFi projects market APY and it is not the same.
Annual Percentage Yield (APY)
APY is an acronym for the “annual percentage yield” which is the real rate of return earned on an investment taking into account the effect of compounding interest over a period of a year (365 days).
So, when looking at these projects with massive APY’s it’s important to realize the principle and interest are combined and compounded every 8 hours (in most of these projects).
So when you look at these APYs, it is calculated using 1,095 compounding cycles in the year — which really means to take full advantage of these rates you would need to leave your money in for the full year. It also means that a good portion of these massive APYs is the cumulative effect of compounding over a year — it’s not necessarily the unbelievable return on the project itself.
Albert Einstein is quoted as saying that compound interest is the most powerful force in the universe. This would be a testament to that.
How are these high APY’s possible?
Now that we are clear on what “APY” means, you may be asking yourself — how are these massive APY’s even possible?
For starters, the effect of the 1,095 compounding cycles in a year and the magic of compound interest is a major contributor to these very high APYs.
It’s also part of a much larger mechanism and protocol first pioneered by Olympus DAO. A project that has been called one of the most interesting economic experiments in recent history.
Olympus DAO uses a mechanism of acquiring its protocol’s own liquidity (instead of renting it out through yield farming) and then effectively doing its own yield farming (internally).
In much the way a central bank operates, Olympus also issues (mints) and sells new tokens when the price is higher than a set point and buys them back when the price is lower than a set point, thereby attempting to stabilize the price of the token and generating value in the process.
In a way, you can think of Olympus as the first real-world example of how “central banks” should operate (in a decentralized manner). 😊
While it is important to enter this space with a bit of caution and skepticism, especially considering this protocol is just over a year old, it does have many merits.
And for those looking for extraordinary gains, the potentially high-risk nature of this investment is easily offset by the ridiculously high returns. While this isn’t intended as financial advice, let’s take a closer look at Olympus DAO and some of its more popular forks and the yields they currently offer.
Olympus (OHM) — APY 2,520%
The first and original, Olympus DAO. In the early days of Olympus, it was offering APYs of over 100,000% and has since settled at around 2,500%.
In the last three months, with the drop in the market, the price of Olympus has also dropped from $1,200 per token to a tenth of this price, sitting around $120 per token.
Hector DAO (HEC) — APY 12,879%
Hector DAO is an OHM fork based on Fantom. It’s very similar in many respects to Olympus and is currently offering an APY of 12,879%.
In the last three months, the price of Hector has dropped from a high of $332 per token to about a tenth of the price, of $38 per token.
However, over the last month, the market price of Hector has seemed to have stabilized while still offering the APY of 12,879%.
Wonderland (TIME) — APY 81,817%
Wonderland, the first fork of Olympus and considered by many to be the most successful so far. While many of the other Olympus forks have reduced their APY considerably over time, wonderful has been able to keep its APY at a consistently high rate of around +80,000%.
In the last three months, the price of Wonderland was trading at an incredible $9,900 per token however has since dropped to about a tenth of the former price to $1,100 per token (while still offering +80,000% APY).
Rome (ROME) — APY 97,785%
Most likely the most interesting OHM fork is Rome DAO. With the goal of being the reserve currency of Kusama and Polkadot, this project is a hybrid Olympus-based liquidity protocol and RPG gamification (based on ancient Rome gameplay). The DAO is set up as “houses” focusing on specific community tasks and staking (referred to as soldiers) can earn spoils in the way of NFTs for their contributions.
This project is just a few months old and recently has been trading around $250 per token with an APY of 97,785%.
As one of the more recent projects, it's worth noting this project offers an incredibly high APY and now at a relatively low market price.
Kronos (KRONOS) — APY 244,177%
One of the more recent Olympus forks, Kronos is set to be the reserve currency protocol for the Klaytn chain based on the KRNO token.
Officially going live in November 2021, in the last two months the price of Kronos token has decreased from $3,700 to now trading at $900 per token while still being able to offer an APY of 244,177%.
As with all these OHM forks, they started out with very high APY’s and over time, the APYs have decreased. While the APY for Kronos is very high, it's likely this APY will also decrease considerably, like the others.
Conclusion
These projects and the mechanisms that support them could easily become the mechanisms that develop into the stablecoins (and reserve currencies) of tomorrow.
Are we now seeing bargain basement prices for Olympic DAO and its related forks which may soon regain their former glory?
Or is this the end of the most interesting economic experiment in recent history?
My opinions on this and more, I share on my website at AltcoinInvestor.com
