On January 17th at 2 am UTC, Olympus – whose native token is OHM – dropped in value by 35% as the result of a whale unloading OHM 82,526, worth $13.3 million at the time. Labelling itself a Store of Value asset, Olympus claims to maintain stability while increasing in value over time. They intend to do this by backing OHM by crypto as opposed to fiat currencies. However, following the sell-off, Olympus' market cap plunged to $877 million from a whopping $1.35 billion.
Since the crash, OHM has been trading at 128.03, down 30.4 per cent in the last 24 hours and 47.2 per cent in the last week. Governed by a DAO, Olympus' unheard-of APY rates in the thousands of percentage points have some doubting its long-term viability, with others even branding the project a scam. Olympus has also been criticised as the value of OHM tokens is determined by the DAO as well as the project's treasury of assets. Some users believe that the DAO is the only entity in charge of fixing the price, which they claim is meaningless and hence subject to excessive volatility.
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Newer altcoins, such as HUH Token, employ a novel process called reflection to prevent another Olympus situation. On the Binance Smart Chain, HUH is the next development of a yield-generating contract (BSC). The smart contract improves a static rewards system by incentivising members to hold their HUH, reducing the possibility of significant price fluctuations due to market swings.
The HUH Token's reflection system is a reward system in which holders of HUH Token are rewarded based on the percentage of their holdings. For example, if user A owns 0.5 per cent of the supply, 0.5 per cent of the HUH awards will be distributed to him. Consequently, all HUH Token holders get compensated for their faith in the MetHUH (HUH's highly anticipated upcoming social platform). The total number of HUH tokens that will be reflected is calculated by adding all buy and sell transactions on the HUH network.
In layman's terms, reflection tokens reward their holders through a process in which transactions are taxed, and a portion of that is redistributed to token holders. The tokenomics of reflection tokens attempt to avoid the huge price drops that new cryptocurrencies frequently experience from whales during their price discovery phase.
Furthermore, because holders are rewarded with tokens, the process encourages investors to hold their tokens as a long-term investment. As a result, reflection is considered an efficient technique to maintain investor loyalty. Reflection tokens are gradually becoming another means to generate yield on crypto assets, similar to how DeFi tokens let investors receive an investment income through staking, liquidity mining, and yield farming.
Every transaction in the network is taxed with reflection tokens. Most protocols levy a 10% transaction fee, which is split among all holders, a liquidity pool, and occasionally a coin burn wallet. With this mechanism in place, investors can "HODL" the token and obtain extra tokens while also benefiting from any price appreciation that may occur as a result of coin burns.
Because the reflection mechanism is governed by a smart contract that automatically distributes tokens between all holders' wallets, a liquidity pool, and a burn wallet, it is decentralised and trustless. Every wallet that receives a portion of the fee may be publicly audited on the blockchain, making the entire process transparent.
Will you be making the transition to reflection tokens?
Learn more about HUH Token here:
Website: https://huh.social
HUH Official Swap- https://swap.huh.social/
Telegram: https://t.me/HUHTOKEN
Twitter: https://twitter.com/HuhToken
Instagram: https://www.instagram.com/huhToken/
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