Proposal to add OUSD
Proposal to add Origin Dollar (OUSD) as a capped collateral to Interest Protocol.
Overview
The Origin Dollar was launched in 2020 and is an ERC20 stablecoin that generates yield while sitting in your wallet. OUSD is backed 1:1 by USDC, DAI, and USDT at all times; holders can go in and out of OUSD as they please. Yield is paid out daily and automatically (sometimes multiple times per day) though a positive rebase in the form of additional OUSD, proportional to the amount of OUSD held.
OUSD yield, currently ~5% APY, comes from a combination of:
- Lending collateral to Aave, Compound, Morpho, Curve, and Convex
- Reward tokens (AAVE, COMP, CRV, and CVX) are automatically claimed and converted to stablecoin
- A 25bip exit fee is charged to those who choose to exit OUSD via the dapp (completely avoidable if using DEX or CEX), this fee goes back to OUSD holders
- OUSD sitting in non-upgradable contracts (about half the OUSD in existence) does not rebase, instead the interest generated from those tokens is provided to those that can rebase
These 4 yield generating functions combined enable OUSD to generate higher yields than lending directly to any single protocol. Each week a governance vote is held to determine the best allocation of OUSD collateral between the whitelisted strategies, voted on by OGV holders. OGV is the governance token for OUSD, and any token holder can participate in these votes after staking their OGV for veOGV. OGV holders also have the ability to propose new yield strategies for OUSD. The current asset allocation can be seen via the OUSD analytics page, with a day-to-day APY here.
There are no lock-ups, terms, or conditions with OUSD; it’s completely non-custodial. Any web3 wallet should be able to support OUSD and its rebasing function, including hardware wallets and multi-sigs. There’s no need to ever again give up the keys to a 3rd party platform, such as Celsius, Blockfi, or FTX, to earn yield.
Parameters
Token Address: 0x2A8e1E676Ec238d8A992307B495b45B3fEAa5e86
Capped Token address:
LTV: 70%
Liquidation incentive: 10%
Maximum Cap: 1,000,000 OUSD
Oracle Address:
Primary oracle: OUSD Chainlink feeds for USDC, USDT, and DAI
Secondary oracle:
Price deviation: 5%
Liquidity
Market Cap: $27,824,965
Liquidity: $27,824,965
Coingecko 7-day avg 24hr volume: $1,260,060
Notable exchanges: Uniswap, Curve, Kucoin, Gate.io
Technical risks
- Type of contract: ERC20
- Underlying asset: USDC, USDT, and DAI stablecoin
- Time: 995 Days Ago (Sept 18, 2020)
- Value:
- Privileges:
- Upgradability: Yes
Supplemental Information
ERC-4626 Compatibility
OUSD yield is paid out daily and automatically through a positive rebase in the form of additional OUSD, proportional to the amount of OUSD held. In the event that it would not be possible to launch an OUSD market due to needing to opt-into OUSD yield generation within smart contracts, an alternate solution would be using Wrapped OUSD (wOUSD). Similar to Frax’s sfrxETH, wOUSD is a ERC-4626 vault designed to accrue yield in price rather than in quantity. When you wrap OUSD, you get back a fixed number of wOUSD tokens. This number will not go up - you will have the same number of wOUSD tokens tomorrow as you have today. However, the number of OUSD tokens that you can unwrap will go up over time, as wOUSD earns yield at the same rate as standard OUSD. The wOUSD to OUSD exchange rate can be read from the contract, or via the OUSD dapp. More information on wOUSD and the wrapping/unwrapping process can be found within the OUSD docs.
wOUSD contract address: 0xD2af830E8CBdFed6CC11Bab697bB25496ed6FA62
Current exchange rate: 1 wOUSD = 1.061661 OUSD
Risk Mitigation
There are five risks when using OUSD, and Origin is making sure to reduce each risk as much as possible:
Small market cap risk - Some may be worried about the market cap of OUSD versus other tokens that have current lending markets. Not that long ago, OUSD reached a market cap of $300m without breaking, and without diminishing the APY it was capable of generating. Origin continues to work on OUSD, despite the lower market cap.
Counter-party risk - OUSD is governed by stakeholders around the world. Everything from yield generation to fee collection and distribution is managed by a set of smart contracts on the Ethereum blockchain. These contracts are upgradeable with a timelock and are controlled by hundreds of governance token holders. While the initial contracts and yield-earning strategies were developed by the Origin team, anyone can shape the future of OUSD by creating or voting on proposals, submitting new strategies, or contributing code improvements. We intend for all important decisions to be made through community governance and limited powers to be delegated to trusted contributors who are more actively involved in the day-to-day management of the protocol.
Smart contract risk of the yield strategies - Origin is only using platforms for yield generation that have a proven track record, have been audited, have billions in TVL, maintain a bug bounty program, and provide over-collateralized loans. Over-collateralization in itself, combined with liquidations, provides a reasonable level of security for lenders.
Stablecoin risk - Origin has chosen 3 of the largest stablecoins to ever exist to back OUSD, and they have stood the test of time and maintained their peg quite well through multiple bull and bear cycles. They have also demonstrated significant growth in circulating supply, so the Origin team is confident that the 3 stables will maintain their peg and that OUSD will remain stable. OUSD is also using Chainlink oracles for pricing data for DAI, USDC and USDT to ensure accurate pricing at all times. In situations where DAI, USDC and USDT fall below the $1 peg, OIP-4 disables minting of additional OUSD tokens using the de-pegged asset.
Smart contract risk of OUSD - Origin is taking every step possible to be proactive and lessen the chance of losing funds. Security reviews of OUSD are prioritized over new feature development, with regular audits being done, and multiple engineers are required to review each code change with a detailed checklist. There are timelocks before protocol upgrades are launched, and deep dives into the exploits of other protocols are constantly being done to make sure the same exploits don’t exist on Origin contracts. Security is extremely important to the Origin team. 7+ audits have been done since 2020, all of which can be seen on Audits - OUSD, and OpenZeppelin is now on retainer. On-chain insurance protocol InsurAce awarded OUSD the highest possible security rating of AAA, of which only 5 projects on the InsurAce platform have received.
How did OUSD perform during the USDC/DAI de-peg?
During the weekend of March 10, both USDC and DAI fell from their $1 price point. Since OUSD is partially backed by USDC and DAI, the price of OUSD also fell below $1 for a period of time. During this time, arbitrageurs were able to buy OUSD at the cheaper price on AMMs, then redeem the OUSD via the dApp into a basket of stables (USDC, USDT and DAI), which they sold back to the market for a profit. With each dApp redemption, OUSD collected a fee, and there were lots of redemptions during this weekend. When the price for USDC and DAI returned to peg, the entire cost was borne by those that sold their USDC and DAI for less than $1. If the price stayed down, LP’s will have traded more valuable OUSD for the less valuable USDC, and will have taken a loss.
In either case, OUSD holders have more stablecoins than they started with, with external parties bearing both the risk and the loss. OUSD holders made a total of $120K in yield during the market events. OUSD APY increased from ~4.6% to ~42% (7-day trailing) and was trading back at 0.99 within 17 hours of losing its peg. OUSD fully restored to $1 within 36 hours as opposed to USDC and DAI which remained severely depegged for almost 3 days.
Relevant References
Origin was founded by Web3 veterans Josh Fraser and Matthew Liu in 2017 and is one of the most venerable projects in the space. Josh and Matthew are joined by the fully doxxed Origin team and community, which includes hundreds of thousands of members and open-source contributors. Origin has raised $38.1M from top investors including Pantera, Spartan Group, Foundation Capital, BlockTower Capital, Steve Chen, Garry Tan, and Alexis Ohanian, and currently maintains a multimillion dollar treasury. As a technology partner, Origin Story has helped launch some of the largest NFT projects to-date:
- Paris Hilton Launches ‘Past Lives, New Beginnings’
- 3LAU Launches Record-Setting $11.7M Auction
- Charlie Bit My Finger NFT Sale Makes Headlines and Sets New Record
- Macallan Cask NFT Sells For $2.3 Million
- First Real Estate Sale via NFT Marketplace
More information on OUSD can be found via:
Origin Protocol homepage: http://originprotocol.com/
OUSD homepage: https://ousd.com/
OUSD docs: https://docs.ousd.com/
Origin Protocol Twitter: https://twitter.com/OriginProtocol
Origin Defi Twitter: https://twitter.com/OriginDeFi