In mid-October, Bitcoin.com News reported on how decentralized finance (defi) or algorithmic stablecoins have seen significant demand in 2021. One particular stablecoin called OHM is quite different from the traditional reserve currency defi protocols today, as OHM is a free-floating currency backed only by what’s held in the Olympus DAO treasury. OHM may not be backed by a U.S. dollar in the usual fashion, but the stablecoin’s $3.6 billion market valuation makes it the fifth-largest crypto reserve currency by market capitalization.

Meet Olympus DAO: An Algorithmic Currency Protocol

When stablecoins were first introduced, a centralized model appeared where a blockchain network is used to distribute tokens that have fiat backing held by an audited third-party custodian. The centralized model still exists today, and the top two stablecoins in terms of market valuation, USDT and USDC are both perfect examples of that type of model. In recent times, decentralized finance (defi) or algorithmic stablecoins have appeared, like Makerdao’s DAI.

The top eight traditional stablecoins in terms of market capitalization.

Makerdao is an Ethereum-based decentralized autonomous organization (DAO) that issues the stablecoin DAI which is essentially backed by a mixture of overcollateralized loans and Makerdao’s repayment scheme. DAO’s are basically frameworks encoded from smart contracts and network participants influence the organization’s motives. Makerdao facilitates…

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