Hi everyone. Though spent many years in traditional finance, im very new to crypto, so my question might be somewhat stupid (thus sorry in advance). Tried to read through as much as possible before posting here, so once again sorry if missed anything.
I cannot figure out the connection between the price of OHM token and Olympus’ treasury. Tbh, in my opinion, there is none. Please correct me, as I really like the project and am very much willing to invest.
Let me explain my thoughts (will take some lines).
Whenever you buy any investment asset outside of crypto, you pay fiat (eur/usd/gbp/whatever) for that asset in order to get more fiat. If you buy stock denominated in USD, you expect company that issued the stock to make as much USD as possible so that it could pay you part of those profits back in USD. If company would only pay you back in more of its own shares instead of USD, that would make it impossible to value the stock in USD - you cannot value anything in itself, as value is relative and only makes sense in either universally accepted metric (usd in fiat system), or bilaterally agreed metric (kisses and hugs within family).
OHM pays OHM for staking. That could be fine as OHM has hard floor at 1 DAI. And that made sense reading through early Medium posts - ohmies get a share of profit from the treasury, so if only a single person stakes OHM and treasury makes 200 mio DAI a year, 50% of which is distributed to stakers, while OHM price is equal to one DAI, the only staker gets 100 mio DAI.
Thats an obvious connection between value of OHM and treasury. It creates incentives to buy and arbitrage OHM to market accepted APY.
However, given all the OIPs (especially 61, if I recall correctly), now there is a hard cap on APY, depending in coins mintd. Meaning that if there was only a single person staking single OHM and all the conditions would be the same as in the scenario above, max she would get is 1k DAI a year (or 1k OHM, or 1k USD). Meaning that despite treasury making 200+ mio of DAI, max reward of that single staker holding 1 OHM (total supply at that time) would be capped at 1k DAI - despite her being the single soul owning part of OHM, meaning the whole existing supply.
Well that creates much less incentives to buy and it disconnects treasury from price - payout does not really depend on treasury or profits then.
In addition, as that one person would gather more and more OHMs, APY would drop as total OHM supply would increase over time.
So as stakers are getting paid in OHM itself and rewards are not influenced by profits made by the treasury, how is it possible to value OHM ? One cannot simply go to DAO and ask to buy back OHM at backing price (which would be neat, as redemption from the funds in traditional finance). The market price may be whatever random number above 1 USD, depending on market sentiment, but not on treasury value. As treasury, made out of different assets, has no connection to OHM in any sense: it only buys back at 1 USD and maximum profit shared is both defined by total supply, instead of profits themselves, and capped at 1k OHM per OHM.
Currently one OHM can generate max 10 OHMs in a year, despite number of participants, profit of the treasury or any other factors.
So what am i missing ? Whats the difference between 500 mio and 500 bio treasury, execpt from runaway, as profit sharing mechanism is hard capped and pay outs occur in OHM (which has intrinsic value of 1), rather than treasury assets ?
There is no sense for anyone to arbi OHM to treas value, as only certain intrinsic value is 1 DAI.
Thanks in advance, hope I explained my question clearly enough.