From DeFi 2.0 to 3.0: Olympus makes a comeback, is a new financial order beginning?

Written by: Luke, Mars Finance

In 2021, OlympusDAO emerged, becoming a sensation in the crypto world with the meme "(3,3)" and the sky-high token OHM, which saw its price surge by 350 times at one point, and its Total Value Locked (TVL) soared to $4 billion! However, the good times didn’t last long, as high inflation and market crashes brought it crashing down, turning it into a "nostalgia trip" of DeFi 1.0. Now, the original team of OlympusDAO is back with a new project called Olympus Pact (codenamed PHI), claiming to usher in the "DeFi 3.5 era". This thing is set to go live globally on May 20, 2025, with registered users already spread across more than 30 countries, and the community is buzzing with excitement. What exactly is Olympus Pact? Can it help Olympus bounce back? This article will explain in simple terms the past and present of Olympus and see if the "new tricks" of DeFi 3.5 have potential!

Past Life: The Glory and Collapse of OlympusDAO

The story of Olympus begins in 2021. At that time, DeFi (Decentralized Finance) was just gaining popularity, and everyone was looking for new ways to play. OlympusDAO emerged, proposing the concept of a "decentralized reserve currency," with its core token called OHM. Its goal was to create a digital currency that does not rely on the backing of the US dollar, but rather controls its own value through the protocol, similar to a "gold standard" in the digital world. How did they achieve this? They implemented two major strategies: the bonding mechanism and staking.

The bond mechanism allows users to purchase OHM using stablecoins (like DAI) or liquidity pool tokens (LP) at a price slightly lower than the market price, with a lock-up period of a few days after the purchase. Staking encourages you to lock OHM in the protocol to earn high interest, with annual percentage yields (APY) potentially reaching thousands of percent. To enhance community participation, they also created the "(,3)" meme, which means "everyone stakes and doesn’t sell for maximum returns." This model allows OHM to not rely on external exchanges like Uniswap, but rather to control its own liquidity, claiming to have "protocol-owned liquidity" (POL).

How is the effect? It's simply explosive! The price of OHM skyrocketed from a few dollars to over 1000 dollars, an increase of 350 times, and the TVL surged to 4 billion dollars, making it a star project of DeFi 1.0. The community is in jubilation, and everyone feels that this is the pioneering work of "DeFi 2.0."

But the good times didn't last long. OHM has a fatal problem: the tokens are being minted too aggressively! It continuously increases the supply of tokens through the "Rebase" mechanism to reward stakers, causing the supply to inflate like a balloon, and the price simply can't hold. By 2023, OHM plummeted from its peak to the bottom, with a decline of over 99%, dropping from over $1000 to almost zero. Speculators ran away, liquidity collapsed, and some called it a "Ponzi scheme." Although it crashed, the POL and bond mechanisms of OlympusDAO indeed opened new avenues for the DeFi space and planted the seeds for the later Olympus Pact.

The team candidly stated in a recent interview: "We are more aware than anyone else of the collapse of OHM, and the problem lies in the mechanism design." They summarized the lessons learned: high inflation, short-term speculation, and governance imbalance are the fundamental flaws of the old model, and it must be completely reformed!

Core of DeFi 3.5: What is Olympus Pact?

Olympus Pact is not just a simple token project; it is more like an "on-chain financial operating system," somewhat similar to the Android system on mobile phones, providing a foundational "toolkit" for various DeFi projects. The team claims this is the "DeFi 3.5 upgrade," aiming to make Web3 finance more reliable and more fun. Let's break it down and see what it's really up to.

1. Tokens are no longer printed indiscriminately: the price is as stable as a "fake stablecoin".

Olympus Pact's token (let's call it PACT, the name hasn't been announced yet) is initially priced at $1, backed by a $1 stablecoin (such as USDC). But instead of a fixed amount of stablecoin, it is controlled by a set of "digital Fed algorithms" that contain 130 smart contracts. What does that mean? That is, if the PACT price rises too high, the protocol will print fewer tokens, or even burn some; If it falls too low, you can recoup the money by selling bonds to stabilize the price. To put it simply, PACT is like a "fake stablecoin": it can rise and fall in small increments without crashing like OHM.

The team said in the interview: "We are not focused on price stability; we want the whole system to run smoothly." This design allows PACT to have some speculative space while ensuring that users do not suffer catastrophic losses.

2. Staking has high interest, but it doesn't allow you to run away at will.

Staking is still the main attraction of Olympus Pact, but this time it's played smarter. Users can stake PACT to earn interest, with a base rate of 0.5%-1% per day. If locked for a long term, the compound interest can reach up to an annualized 73 times! Sounds tempting, right? But hold on, the team has learned from experience this time; they encourage you to "stay long": for example, the interest for locking in for 1 year is double that of locking in for 1 month, similar to a bank's fixed deposit. This way, everyone won't just make a quick profit and leave, which reduces selling pressure on the tokens and helps stabilize the price.

3. Bonds are not just about raising funds: The treasury provides you with a safety net.

Olympus Pact also has a bond mechanism, which simply means that if you provide stablecoins (like USDC) or liquidity pool tokens (LP) to the protocol, you can buy PACT at a discount of 7-9%. After purchasing, it will be unlocked after a few days or weeks. This approach allows the protocol to receive real funds while slightly increasing the token supply, but it won't spiral out of control like OHM.

All this money goes into the "national treasury," which is equivalent to the safe of the agreement. For every PACT, there is an equivalent amount of stablecoin backing it. For example, if 100 million PACT are circulating in the market, the treasury must have 100 million dollars in stablecoin. In case the price drops, the treasury can withdraw money to support the market, providing you with a sense of security.

4. You can also "alchemy": turn tokens into stablecoins

The most interesting thing is that Olympus Pact allows you to "refine" PACT into a real stablecoin (let's temporarily call it A). You exchange PACT for A through the protocol, and once the exchange is completed, PACT is destroyed, reducing the number of tokens in the market, which naturally stabilizes the price. The newly exchanged A is pegged 1:1 to the treasury money, as stable as USDT. This trick can control inflation while giving users more choices, making it quite fun.

5. Multi-chain + Modular: Not afraid of traffic jams, can be changed freely.

The Olympus Pact doesn't just run on one or two chains; it supports multiple chains including Ethereum, XONE Chain, Polygon, and BSC. You can transfer assets from the expensive Ethereum to the cheaper XONE Chain, with transaction fees as low as a few cents, making it accessible for ordinary people. In case one chain goes down, the other chains can still continue to operate, preventing a total collapse.

It also has a "modular" design, what does that mean? It means breaking the system into several small parts, such as managing funds, managing votes, managing rewards, and each part can be upgraded individually. It's like updating your phone system; you don't have to throw away the whole phone for a new one, just fix and patch it up to use it. This makes Olympus Pact particularly flexible, allowing it to keep up with market changes.

From past lives to present: What has Olympus Pact changed?

Compared to OlympusDAO, Olympus Pact has undergone a complete transformation. Let's compare and see what changes it has made:

Token Economics: OHM is a "money printer" with uncontrolled supply; PACT uses algorithms to control the market, allowing for both price fluctuations and stability, and can even be "refined" into a stablecoin, solving a significant part of the inflation problem.

Staking mechanism: OHM encourages short-term speculation, profit-taking and running away; PACT rewards long-term locking, reducing selling pressure, making the system more stable.

Technical Architecture: OHM runs only on Ethereum, with high costs and great risks; PACT uses multi-chain + modularity, with low costs, iterative capabilities, and accessibility for ordinary people.

Community Governance: OHM's governance is relatively loose, and the community is dispersed; PACT strengthens cohesion by turning users into "shareholders" through global community summits and DAO voting.

The team said in an interview: "We are not trying again; we want to build a new financial civilization!" They call this "DeFi 3.5," which means it is more advanced than DeFi 1.0 (Uniswap, Aave) and DeFi 2.0 (which focuses on sustainability and cross-chain). They aim to create a fun and reliable financial ecosystem using a dynamically regulated token mechanism, multi-chain architecture, and community governance.

Written at the end

The birth of Olympus Pact marks a new phase in DeFi's transition from savage growth to systemic change. With innovative tokenomics, multi-chain architecture, and modular design, it responds to the lessons of OlympusDAO's failures and outlines a new blueprint for the Web3 financial order. The launch on May 20, 2025 is just the beginning, and the wave of DeFi 3.5 has been further strengthened by the return of Olympus.