Another day, another new all-time-low for Ohm. 

OlympusDAO's Ohm has dropped a staggering 97.9 percent from its all time high to trade around $29 at press time. Ohm's market slaughter represents an extraordinary fall for the self-proclaimed reserve currency of Decentralized Finance (DeFi) — and an extraordinary opportunity for those trying to turn their Ohm portfolios around, let alone new investors. 

My Jan. 2022 Ohm purchases currently stand at $215 spent per Ohm. I can either accept my portfolio's 86 percent value loss, or I can purchase more Ohm to drastically lower my break-even price and target future profits. 

Here's why I chose the latter. 

The bullish (or survival) case for OlympusDAO

OlympusDAO's Ohm represents a high-risk investment I feel comfortable with because of three observations:

• The strength of OlympusDAO's treasury. The treasury's worth stands at $403 million at press time. 
• Sustained revenue despite poor market conditions. OlympusDAO generates several million USD in revenue per week, a large decrease from its bull-market revenue stream that never-the-less suggests sustained interest. 
• Inverse bonds. If successful, inverse bonds will apply market pressure to keep Ohm's price at or above its treasury liquid-backed value, currently around $25/Ohm. 

Screenshots from OlympusDAO's dune.xyz dashboard, taken at press time. 

If continued revenue sustains Ohm's liquid backing — and if inverse bonds successfully keep Ohm's market price above its liquid backing value — the current sub-$30 Ohm price represents a bargain.

March 12's Ohm purchase

Relying on the "if" statements above exposes my portfolio to considerable risk. To better understand this risk I modeled my portfolio's break-even price through May 2023 after different $30/Ohm purchases.  The $30/Ohm price represented the casual average price I observed this weekend. 

I calculated several break-even price curves with the following steps:

• Define my current Ohm portfolio: 3.55 Ohms with a total USD investment of $763. 
• Simulate an X-Ohm purchase at $30/Ohm, where X represents some integer value. 
• Model OlympusDAO's staking APY as a uniform distribution between 500 and 1000 percent. I described my rationale for this model in a previous post, linked here. 
• Calculate how much Ohm I would accrue at each rebase event through May 2023 with a starting Ohm supply equal to my current Ohm portfolio, plus the X-Ohm purchase. Note that staked Ohm compounds once every eight hours in what's called a "rebase" event. 
• Calculate the break-even price point at each rebase event through May 2023 by dividing the modeled USD investment by the accrued Ohm at that rebase. 

I performed this calculation for 2-Ohm increments between 0 and 40. The results are plotted below.

Two important observations are visually apparent. Purchasing a few Ohm at $30 reduces my break-even price by several hundred dollars. There's a point however where my break-even price does not appreciably drop even after very large Ohm purchases. 

To better understand this cutoff I considered the break-even price points for the same $30/Ohm purchase mesh at three month intervals from today.

I really like this graph, but its hard to interpret. The x-axis represents the number of hypothetical $30 Ohm purchased today. The y-axis represents break-even prices. Each point represents the break-even price at a particular date after some $30 Ohm purchased today, where the date is signified by color. You can also think of this graph as a collection of vertical slices, or snapshots, made from the graph before it. 

Its clear that purchases of up to about 8 Ohm drastically reduce my break even price even just three months from now (black curve), and result in a one-year break-even price of about $10 (red curve). Purchases beyond about 8 Ohm quickly lose their impact however. 

Here are the tabulated values for those interested. 

My financial situation and risk tolerance makes me willing to accept a 1-Ohm price as low as $15 in one year. That's $10 below the liquid-backed treasury value, and about $15 below current prices. I could (and should) get a more rigorous number, but this'll do for now. 

The graph and table suggest I should by around 6-Ohm at $30/Ohm to ensure I at least break even in one year. I decided to purchase 2-Ohm this weekend at about $30/Ohm. I want to watch what Ohm's price does as it approaches its liquid-backed value before making any more purchases. I'll probably purchase the remaining four Ohm over the next two weeks depending on price action. 

Here's my new Ohm accrual plot through the next year. 

Final thoughts

This post got quite technical -- thanks for reading if you've made it this far! I've worked on this Ohm analysis off-and-on the past month, but finally decided to purchase a bit more and publish it here. Ohm represents my most risky investment, and I'm trying to get in the habit of making informed decisions on it. 

As I mentioned before, I'm only investing money into Ohm I'm comfortable losing. I can't emphasize enough how important personal due diligence is if you decide to dip your toe into OlympusDAO or other DeFi products. 

Thanks for reading! 

Thumbnail photo by Tom Podmore on Unsplash