DeFi – Expanding Beyond the Prisoner's Dilemma
The prisoner's dilemma, a well-known concept in game theory, illustrates how individual rational choices can lead to suboptimal outcomes for a group. OlympusDAO’s implementation, particularly the (3,3) strategy, had significant flaws, including the assumption that staking necessitated bonding. This article explores these flaws and how Syncus optimizes its strategy using game theory.
OlympusDAO: The Misguided (3,3) Strategy
OlympusDAO used the prisoner's dilemma matrix to illustrate beneficial actions for participants, introducing the (3,3) meme. This strategy, however, had critical issues. It assumed that staking required bonding, an assumption that did not reflect reality. Bonding – crucial for the protocol’s growth – was often bypassed in favor of market buying, leading to a disconnect between intended and actual participant behavior.
Omen: The DAO Always Wins
In Omen, actions that might appear harmful are intentionally designed to benefit the DAO. This creates a win-lose dynamic where the DAO consistently comes out ahead. Long-term stakers of OMEN, who can take out loans against their holdings (addressing the "HODL" dilemma, where you accumulate gains but cannot access them), are positioned to profit from the actions of short-term speculators. This setup effectively turns Omen into a decentralized casino, where the house – the DAO and its long-term stakeholders – always wins.
In the long run, OMEN represents a bet on a new financial paradigm, driven by the collapse of the traditional banking system as more people recognize the truth. In the short term, it’s a wager on human nature and the speculative bets that people make on this shift.
Two-Player Model and SYNC's Resilience
In a two-player scenario within Omen, any sale of OMEN results in a loss for the seller but generates a benefit for stakers, creating a continuous value flow to the DAO. This setup is fundamentally different from typical crypto Ponzi schemes or meme coins. Even if OMEN’s activity slows down, the ongoing distribution of APY (Annual Percentage Yield) reignites interest, sparking a cycle of renewal. As a result, selling OMEN can actually be advantageous for the ecosystem, acting as a redistribution mechanism that keeps the system dynamic and self-sustaining.
A better chart would for OMEN would be one describing the actions a player takes and the results for that player and the DAO.
The fact that selling OMEN fuels the ecosystem through a tax means that a user is missing out on growth they're creating, in addition selling OMEN becomes especially -ev considering that the user also pays that tax. It never makes sense for a person to sell OMEN.
The OMEN Trading Phenomenon
An unusual trading pattern has emerged in OMEN, characterized by cycles of pump, dump, and a subsequent pump, all within an overall upward trend. Unlike typical cryptocurrencies, where trading often results in a zero-sum outcome, Omen profits from every transaction. The DAO takes a 15% cut from the total trading volume, ensuring that the DAO benefits even if the token price remains flat. This profit-sharing mechanism draws more attention, attracting both buyers and sellers, which in turn fuels a self-sustaining cycle of growth.
Why this happens: In a typical protocol, if 100 participants bought and sold OMEN, it would result in a zero-sum game—where all the money going into the system is eventually taken out, albeit in different proportions. This is how meme-coins and most cryptocurrencies that don’t offer real utility function. They act like a pot where users put their money in and fight it out, often referred to as PVP (Player vs. Player) tokens. However, in OMEN, the DAO collects a 15% fee from the total trading volume.
So, even if everyone buys and sells OMEN, the DAO profits, regardless of whether the token price stays the same. This profit is then distributed to token holders, attracting more participants—both buyers and sellers—which fuels the cycle described earlier.
This creates a visible pattern on the chart: a significant pump, followed by a dump, and then a new floor created from the tax on transactions, reducing the amount of OMEN in the liquidity pool. This sets the stage for the next pump, continuing the cycle as OMEN steadily increases in value along with its treasury.
The key difference between Syncus and typical crypto Ponzi schemes or meme-coins is that Syncus has no "death spiral." Even if activity slows down, there’s still APY (Annual Percentage Yield) to be distributed, which draws in more volume (or revenue) and continues the cycle of increasing APY. This creates a "reigniting" protocol where, when OMEN drops in price, it makes sense to buy and stake it, restarting the process. Syncus leverages protocol profits to gain attention in the attention economy.
In this system, selling OMEN actually benefits the protocol. OMEN needs these sales to keep the redistribution cycle going—what can be considered a bullish redistribution model.
While you might see OMEN's price go up by 100% one day and drop by 50% the next, this is simply due to previous holders taking profits, while new holders come in. Rather than focusing solely on the price, the key is to pay attention to the distribution of OMEN.
The biggest risk for $OMEN is rapid price increases without any dumps in between, as this could lead to larger holders dumping at higher prices, extracting more from the protocol-owned liquidity. The ideal situation is to have many small holders who profit by 50% at a time, which maximizes value for all OMEN holders.
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