Every week Olive hosts a community AMA on its Twitter platform. 

In our recent community AMA call, we discussed:

📍 How Olive’s v1 work

📍 The upcoming v2 & why it is better

📍 Expected APYs with LYF 

📍 Olive’s LYF over others.’

This blog will give you a recap of the most important takeaways:

Olive’s success and its v1:

Olive offers Principal Protected Vaults, letting users get double-digit APY on their tokens.  Since the APY is generated off of the yield coming from the deposited principle and not the principal itself, your deposits are entirely safe. 

Over 15000 unique wallets have deposited their $GLP or $MVLP tokens in the Olive Protocol, amassing a TVL of over $3 million. 

[Image Source: DefiLlama]

The total volume traded on the platform is north of a staggering $300 million. Olive uses an off-chain mechanism called “Structured Products” to boost the yield. Here’s how it works:

On its protocols, Olive accepts only yield-bearing tokens like $GLP & $MVLP. Once a user submits the tokens, Olive harvests yields on these tokens on a weekly basis. Then, it uses that generated yield to trade options. 

Olive goes long or short with a call or a put option (or their combination) on blue chip assets with counterparties on options trading markets. These trades happen totally off-chain since the liquidity of structured products is not present on-chain. As a result of these trades, Olive either makes a profit or a loss. 

In the case of profit, the yield on the Principal Protected Vaults gets amplified. 

When Olive takes a loss, you get a yield slightly lower than what Olive harvested for you on your principal token, either GLP or MVLP. 

Olive v2, and why is it better than v1?

Since there is no liquidity of structured products on DeFi, Olive has to trade them off-chain with counterparties. 

With its v2, Olive is coming up with an innovative approach to offer everything on the chain. There will be no off-chain component to the Olive vault. 

Besides that, Olive is also going to boost the yield users get on the protocol. Here’s how:

Olive will provide leveraged yield farming in a fully on-chain manner. You’ll be able to take leverage as high as 10x on your capital. 

Say, you have 100 GLP tokens; Olive lets you borrow 900 more tokens from the market. That 10X leverage shoots up your APY to 200%—an instant 10X boost to your APY.

Plus, there’s going to be very less liquidation risk because of the way the protocol is designed. 

Is Olive safe?

Yes, Olive is entirely safe. For one, the code is open-source for anyone to look at. Secondly, the new code base for v2 is getting audited, and the team is arranging bug bounty programs. 

Also, with the v2 launch, the docs are being revamped, so the community has full transparency and understanding of how the Olive protocol works. 

How is Olive different from other LYF platforms?

Other famous LYF platforms, like Mesh Swap, offer leverage trading on decentralized exchanges. These DEXs have chances of high impermanent loss when the price of two tokens involved move relative to each other. In certain scenarios, the impermanent loss could be more than the APY a user is generating, making your positions unprofitable. You might lose your entire position.

But Olive is going to borrow similar assets. 

Say, in the case of the GLP vault, we are going to borrow USDC as it closely resembles the price movement of GLP tokens. 

For the ETH LP token vault, we are going to borrow ETH. 

This decreases the probability of any kind of impermanent loss and, subsequently, liquidation possibilities. With its v2, Olive wants to focus on yield-bearing position and not as much on degen possibilities. 

That’s a wrap on this blog. 

Hear the full community call recording here.

Join our future calls to get a chance to win $100 in giveaways.