Olive — The Next Frontier of DeFi Real Yield? | by Henrique Centieiro | Feb, 2023

Remember when I told you that you could make your assets work for you by simply letting them earn yields? Yeah? Okay. If you remember, well, that’s great. If you don’t, you’re in luck. Just keep on reading, will you?

In this article, I will tell you everything you need to know about Olive Finance and how to take advantage of it to earn very interesting double-digit yields!

Investing in cryptocurrency has gone beyond just trading assets. As a matter of fact, one of the many ways to invest in cryptocurrency is to save and earn some sweet passive income. Now you may be wondering, “How am I investing by saving?” Actually, the only people that’ll do the wondering are people that are new and don’t know how it works. Because I trust my Day 1s. But hey, if you’re a rookie, you’re in the right place.

You know how you put (save) your money in your bank account and at the end of the month, your bank credits you some extra amount of money, although very little? Um… Yeah.

In tradFi, the bank borrows your saved money, lends it to other people, and in return, you are paid some sort of interest. That’s exactly how it works here in DeFi as well, but it even makes more sense because you earn in crypto and the rates are much better. I mean what’s 1% that your bank gives you, compared to 10% to 30% APY and higher?

It’s important to note that APY means Annual Percentage Yield and it takes into account, compound interest. Compound interest is known as ‘interest on interest’ and it multiplies money faster. That’s for those that are quite new in the space.

There are so many protocols that pay high APYs and because these rates are tempting, you might want to take your time before choosing the one that works best for you. The higher the APY rate, the more research should be done, because you don’t want to fall into the wrong hands. Additionally, some DeFi protocols/pools might pay high APYs but only for a short period of time in order to attract new users. This is why this article is a review of one of the many protocols, called Olive. In this article, we will discuss all there is to know about Olive, how you earn on the platform, and the risks associated with it. And more!

BTW, if you want to learn everything about DeFi, check out this DeFi course.

Olive is formerly known as Polysynth, and it is a multi-chain protocol that amplifies your yields with the use of its structured products, without putting your funds in a risky position where all your money can be gone.

When we say ‘multi-chain’, we mean that it is deployed across multiple networks such that they interact seamlessly. Olive runs on Ethereum, Polygon, and Arbitrum.

Take a deep breath. Now let’s go over it again, slowly this time.

Olive allows you to make up to 34% APY on your crypto assets in real yields. It also eliminates the risks associated with the possibility of a borrower not paying back a loan (credit risk) or of you losing your whole funds (principal risk). So rest assured, from the product perspective, your money is secure. This doesn’t mean the protocol is entirely risk-free. We will find out later, the risks associated with it. But at least, Olive Finance is audited.

Olive also has a protocol token OLIVE issued by the Olive DAO. This token is both a utility token and a governance token.

BTW, if you wanna try Olive, make sure you use my referral code. This way, both you and I get boosted and have discounted fees.

DeFi option vault (DOV) is one of the ways to earn through crypto, and this is how it works: I’m going to assume you know what a vault is- It’s where you keep something safe to access later. So here, your crypto is added into a vault, and these funds are used by algorithms in different options trading strategies to make you more money. Think of it as someone else managing your money for you but in this case, Olive is a decentralized asset management platform.

Olive has a DeFi Option Vault structure, and a simple one at that, and investors can deposit their assets in any strategy vault of their choosing, and then, the auto-compounding smart contracts pick up from there.

There are so many strategies to choose from, including selling covered calls or covered puts- which are the easiest and most popular way to generate yields on Olive, using options.

Olive DOV allows you to earn yields regardless of what the market says. So it doesn’t really matter if the market is stable, rising or even falling.

Principal Protection vaults or PPVs can amplify base yields on assets such as GLP, ETH, MATIC, USDC, etc and investors are allowed to select from a wide array of strategies to be used to amplify yields. The GLP vault for example will amplify your yields on GLP by up to ~1.5X without exposing your funds to principal and credit risks.

These strategies include Range accrual, twin-win, ascent, summit, digital, highland, etc. Out of these strategies, only 2 of them are popularly used.

Range Accrual strategy

This strategy allows the investor to earn a return if the underlying’s price stays within an already set range, during a set observation time. Investors can only earn yield when the price stays within that range in a cycle. The cycle here is from Monday to Monday.

If for some reason the underlying price goes out of range for more days/ observations than within range for the remaining days/ observations, the amplified yield will depend on how many days the price remains within range. The worst-case scenario is if the underlying price remains out of range for all the observations, your funds (principal) will not be affected because the base yield is the major instrument at work in this strategy.

Twin-win

This one works quite differently from Range accrual. This strategy allows the investor to profit from price movement in either direction. Investors can only earn maximum yield when the barriers (the Up and Down barriers) are not breached. If the barriers are breached, the investor gets compensated with a base coupon.

I really like this strategy because it not only allows an investor to earn when the underlying price increases, but also when it decreases as long as the pre-set range does not get breached. Even at that, if the range gets breached, investors can still earn a (guaranteed) base coupon.

I think it’s a good deal. What say ya’?

Another cool thing about Olive is that you can refer your friends and earn up to $2m. I don’t know about you but that’s a nice feature.

HOW IS APY CALCULATED FOR OLIVE?

Olive’s APY is calculated by annualizing the last 4 cycle’s average yield, if the vault incurred a loss in any of those cycles, the APY calculation does not include that particular cycle. I think this is a way to protect your earnings from losses.

Although there are no withdrawal fees on Olive, there is currently a 2% management fee charged on an allocated basis and a performance fee of 10% which is only deducted if the cycle brings profits (which is similar to Yearn Finance and Beefy). I like that!

PROS

• To start, the double-digit yields on USDC, ETH, MATIC, and WBTC 🤑
• There is no lock-in, so investors can withdraw anytime. There are no restrictions to your holdings.
• There is no minimum deposit required to participate in the vaults. It doesn’t matter how much you are depositing.
• The yield component of your assets is used to run your chosen strategies, and the last cycle’s yield is used as the next cycle’s principal, so your funds are safe from principal and credit risks.
• Olive had investors such as the VCs JumpCapital and Hashed. The team is also pretty solid.

RISKS

• We already stated that Olive incurs neither principal risk nor credit risk. There might be some volatility risks tho.
• It doesn’t incur Principal Risk because the yields are used to generate additional returns in the vault and it doesn’t incur Credit Risk because your deposited collateral is never lent out.
• However, Olive is susceptible to Smart Contract Risk. There may be the risk of smart contract failure in the underlying vault or protocols worked with, and let’s be honest, most, if not all of the blockchain protocols are susceptible to smart contract risks. But that doesn’t mean we have to rule it out. Olive smart contracts were audited by Peckshield and you can check the audit report here.

To conclude, because this isn’t financial advice, I won’t be telling you outrightly what or where to invest, but if you think trading crypto isn’t your thing, then you can look into crypto-saving apps.

But make sure to do extra research and be sure that you’re really satisfied before investing your funds.

What do you guys think about Olive? Is it worth it? Please let me know what you think.

If you’re interested in Blockchain, Crypto, NFTs, Metaverse, Fintech and DeFi, don’t forget to check out my highly-rated and super fun courses:

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