These are dire times for Ohmies. 

OlympusDAO's Ohm is down 95 percent from its all-time high, and rebase rewards continue their fall towards a relatively scarce 1000 percent equivalent APY. Ohm's freefall pushed my best-estimate break even point to no earlier than September 2022. Here's how I calculated that value, and why I might buy more Ohm despite the apocalyptic past 30 days. 

Rebase reward rate estimate

OlympusDAO compounds interest on staked Ohms every eight hours. These "rebase" events reward stakers with interest rates commonly quoted in equivalent APY. The community voted several months ago to reduce equivalent APY reward rates to 1000 percent and below once the total Ohm supply exceeds 10 million -- an event likely by early Feb. 2022. 

A previous OlympusDAO post details how I estimate future rebase reward rates. I used the same method to produce three different rebase rate distributions:

• The first rate distribution assumes the highest possible rebase rate prescribed by successful community vote on DAO proposal OIP-63. In other words, every rebase event after early Feb. 2022 will have an equivalent APY of 1000 percent. 
• The second rate distribution assumes there is an equal chance any rebase rate on the prescribed range can occur. In other words, every rebase event carries a random value chosen from a uniform distribution between 500 percent and 1000 percent APY. 
• The third rate distribution assumes the lowest possible rebase rate. In other words, every rebase event after Feb. 2022 will have an equivalent APY of 500 percent. 

Visually, these three rebase interest distributions are shown below. Note the discontinuity for all three distributions occurs on Jan. 31, 2022 -- my estimate for when the total Ohm supply will exceed 10 million. 

My break-even price curve

I purchased 2.1 Ohm in two transactions made Dec. 21, 2021 and Jan. 15, 2022 for $763.29 total -- including $134 in Ethereum gas fees. Since then I've accrued 2.6 Ohm. This gives me an equivalent 1-Ohm purchase price of $293.57. 

I used my estimated rebase reward rates to simulate my Ohm accrual through 2023. I then calculated my break even price per rebase by dividing the accrued Ohm by my total investment so far. 

My earliest break-even date at current prices: Sept. 10

The break even price curve is a comfort -- or a letdown, depending on your viewpoint. I'll likely break even sometime between September and October 2022 if the Ohm price settles near its current value. Very few investments can claim their interest rates will allow investors to break even after a 95 percent dip below the all time high -- let alone within 12 months -- but OlympusDAO is no typical investment. 

Conversely, no one really knows how far Ohm is from rock bottom. OlympusDAO is the trailblazer for a completely new type of financial apparatus. I need to get comfortable with the idea that the price could go to zero. This is a huge disappointment for Ohmies like me who were dazzled by OlympusDAO's massive on-paper potential.  

Why I am tempted to buy more

It might be the gambler in me, but I actually see a huge opportunity in Ohm's dire situation. Ohm's price has converged near its treasury-backed value -- $59 and some change at press time -- and I am hopeful the market will treat this value as rock bottom. 

If Ohm's treasury-backed value acts as a price floor, that means each compounding rebase event potentially offers an equivalent 1000 APY interest -- plus any percentage price rise over the treasury-backed value. 

If we model a 1-Ohm price purchased today at $67ish dollars, we get an attractive break even price curve that hits the $59 treasury-backed value by mid February. In other words, one Ohm purchased today may still be profitable short-term even if the Ohm price drops below the current treasury-backed value. Of course this makes the huge assumption that Ohm's treasury continues its strength, but if that assumption fails then OlympusDAO is finished and my investment is moot anyways. 

That's the post! Thank you so much for reading and for support. Do you own and stake Ohm? Do you agree with my bullish thesis, or do you think I'm delusional? I genuinely enjoy the Publish0x community's comments, and I'm eager to hear other opinions. I'll continue to update y'all periodically on my Ohm investment. 

Cheers! 

Thumbnail photo by Krzysztof Kotkowicz on Unsplash.

This analysis was completed in Python. View the source code here: https://github.com/simplyrangel/crypto-publish0x under 2022-01-post-5.