# Vault Synopsis
### OHM Looping Powered by Lov
hOHM delivers a new DeFi primitive for a liquid, maximally leveraged OHM token by taking advantage of new features introduced in the new Cooler V2 from OlympusDAO and building atop the robust foundation of Origami's battle-tested automation backend for looping money market applications. hOHM also drew inspiration from [TempleDAO Protocol's battle-tested lending smart contract](https://reports.electisec.com/08-2023-TempleDAO-Lending-Recheck),
### Welcome hOHM
Olympus' Cooler Loans V2--also known as MonoCooler--unveiled key improvements over Cooler V1. Specifically for hOHM, the two most important additions for Cooler v2 are:
* Single, consolidated USDS loan position for each user instead of multiple positions.
* Origination Loan-to-Value (OLTV) increases automatically to a fixed target over time.
Through governance, OlympusDAO will approve a sensible OLTV target to be reached by a certain date and the current OLTV will rise linearly until the target OLTV is reached. This new OLTV drip mechanic is derived from [TempleDAO's Treasury Price Index](https://docs.templedao.link/temple-codex/treasury-price-index). Users who want to maximise their exposure to OHM premium by taking out a USDS loan up to the maximum OLTV would have to do so continually and manually manage their debt position. hOHM steps into the void to meet this need.
hOHM introduces a tokenised Balance Sheet framework that maintains reserve assets and liabilities without relying on any external oracle pricing. The vault share price is seeded upon initialisation and dynamically tracks both gOHM/hOHM (collateral balance) and USDS/hOHM (debt). The unique oracle-free feature of hOHM allows scaling beyond traditional liquidity pool and price impact constraints.
| Vault Action | User Deposit | User Withdraw |
| ------------ | ------------ | ------------- |
| `mint ()` | gOHM | USDS, hOHM |
| `redeem ()` | USDS, hOHM | gOHM |
{% hint style="warning" %}
hOHM cannot be minted out of thin air by elevated access. Each hOHM in circulation was minted by providing the vault reserve gOHM and incurring the reserve USDS debt on a per share basis.
{% endhint %}
The hOHM vault will always max out the OLTV and maintain a nominal amount of surplus USDS. Idle USDS is deposited into the [Origami sUSDS+s Vault](https://origami.finance/collections/stables-collection/1-0x0f90a6962e86b5587b4c11bA2B9697dC3bA84800/info) to earn yield on idle funds at a risk-free rate. When below the threshold, the USDS buffer would support interest repayments under zero OLTV growth scenarios. Once the USDS buffer is above a policy threshold, funds will be deployed towards`sweeps()` i.e. repurchase of hOHM from a [sUSDS/hOHM Uni V3 pool](https://app.uniswap.org/explore/tokens/ethereum/0x1DB1591540d7A6062Be0837ca3C808aDd28844F6?inputCurrency=0xa3931d71877c0e7a3148cb7eb4463524fec27fbd). Up to 3.3% of the repurchased hOHM will be sent to Origami as a performance fee, while the remaining 96.7% of hOHM will be burned to increase gOHM backing (and USDS debt) per hOHM.
{% hint style="info" %}
The Uni V3 sUSDS/hOHM liquidity will be bootstrapped by TempleDAO, one of the largest gOHM holders and a strategic Partner to Origami Finance.
{% endhint %}
While there is no mint fee for hOHM, users who wish to exit the vault will incur a 1%`exitFee` (updatable) to withdraw their gOHM collateral on top of repaying the then-current USDS debt. This fee is also referred to as a Retention Bonus as the retained hOHM is removed from circulating supply for the benefit of existing hOHM holders i.e. reserve backing will rise for remaining hOhmies.
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