Tokemak: The Kingmaker?
Can Olympus utilize Tokemak to become the base trading pair in DeFi? The bread crumbs are there to follow.
Introducing Mess Hall Musings: a platform to share ramblings that are neither news, nor deeply researched Features. If you have a thought to share, please reach out to @tokebase!
Tokemak's ability to direct liquidity to various exchanges is a valuable tool that DAOs can use to minimize their dependence on liquidity mining, saving many millions of dollars worth of token emissions while simultaneously reducing inflation and sell pressure.
But that's not the only use case for a Tokemak Reactor.
What if a rapidly growing stablecoin wanted to become the new base-pair asset across all of DeFi? This would require a tremendous amount of liquidity to usurp ETH and USDC as the most direct route, but coordinating such an initiative through traditional liquidity mining incentives would be incredibly costly and depend on mercenary capital – which is unlikely to stick around long term.
But this is the lofty goal of Olympus DAO: to be the "central bank of DeFi" and become the base trading pair asset in crypto.
Olympus owns 99.9% of their own liquidity, and has the largest treasury of non-native assets within DeFi due to their clever bonding program. Additionally, 90% of OHM is staked within Olympus by end users who hold in order to earn rebasing rewards.
They also love Tokemak.
Reading between the lines, it's clear why Olympus DAO is so hyped on Tokemak – it's the key to efficiently becoming the standard base asset across major trading pairs.
OHM is already one of the most liquid pairs on Sushi, and is frequently used for routing swaps. Once the Reactor goes live, Olympus DAO will be able to use their vast TOKE holdings received during their DAO<>DAO swaps to decide precisely where liquidity that is staked in the OHM Reactor will go.
With the introduction of gOHM, Olympus plans to go multi-chain (Tokemak shares the same plans), so not only can OHM become the base trading pair across L1 ETH DeFi, but it can become the base pair on other chains as well.
Will Olympus DAO figure out a way to utilize the $3B+ of staked OHM to help accomplish this goal? We think they might have something up their sleeve... maybe a gOHM reactor that will allow users to earn both rebasing rewards and TOKE rewards – encouraging even more liquidity to be staked in a Reactor, ready to be deployed to pools across various DEXs?
There's a lot to speculate about, and we think the Olympus and Tokemak teams have put their heads together to come up with a roadmap to make this dream a reality. We'll keep following the breadcrumbs, so stay tuned for updates.