Proposal: Adding OUSD as a lend/borrow asset

Proposals
1

Hello, I am Peter from Origin Protocol. I would like to propose adding the Origin Dollar (OUSD) as an asset market for lending and borrowing on the Strike Finance dAapp.

Background on OUSD

The Origin Dollar was launched in 2020 and is Origin Protocol’s second product, behind Origin Story, which launched in 2019. OUSD 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:

  1. Lending collateral to Aave, Compound, Morpho, Curve, and Convex
  2. Reward tokens (AAVE, COMP, CRV, and CVX) are automatically claimed and converted to stablecoin
  3. 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
  4. 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.

Benefits to adding OUSD to Strike

For Strike users
OUSD lent provides an immediate arbitrage opportunity on the borrow side for Strike users - users will choose to borrow OUSD when the variable APY to borrow OUSD from Strike is lower than the amount OUSD will generate in passive yield sitting in user wallets - users capture the difference in APY as pure profit.

For the Strike protocol and DAO
The profitable opportunity to earn additional yield from borrowing OUSD will create significant lending demand for current OUSD holders, and the constant lending and borrowing will capture significant trading fees for Strike on the borrow side.

For current OUSD holders
At the moment, the only use case for OUSD is to hold it in your wallet to generate yield, or LP it on a DEX. Adding an OUSD market for lending will provide a new utility for OUSD holders, and an alternate option for yield generation. If it’s possible to enable OUSD rebasing for OUSD lent to Strike, then OUSD holders are incentivized to lend by the double yield generation. In the event it turns out to not be possible, or to be too complicated, to enable OUSD rebasing within an Strike lend market, it would still be beneficial to enable non-rebasing OUSD for lending and borrowing on Strike, as the constant borrowing of OUSD will increase the APY for lending OUSD to Strike.

OUSD Proposals on Other Protocols
There are several similar proposals going through the governance process at the moment with other lend/borrow markets, such as:

OUSD as Collateral

Given OUSD would be a new asset market to Strike, we are proposing to start with a low collateral factor, between 1% - 25%. If it would make the community more comfortable, we would be open to adding the OUSD market without enabling OUSD as collateral on Strike, for the first 90 days, or indefinitely - as it would still be beneficial for current OUSD holders to lend to Strike, and for Strike users to borrow OUSD from Strike.

4 Likes
2

The Strike team is worried about the security of the OUSD token…let’s dive into each possible risk of OUSD!

There are five risks when using OUSD, and Origin is making sure to reduce each risk as much as possible:

Small Market Cap risk - Like many projects, OUSD has suffered the effects of the bear market, causing its TVL to drop significantly. However, this should not be an issue, as 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.

Counterparty 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 the price of DAI, USDC or USDT fall below $0.998, 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. 10+ 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, which only 4 projects on the InsurAce platform have received.

3 Likes
3

This is a great proposal! I support this proposal

1 Like
4

Agreed. I’ve wanted arb opportunities on Strike for a while, this would be an easy way to do so

5

Thanks for the additional info. I’m surprised there are only two other comments on this proposal

6

Thanks for the kind words @strkluvr, @hottoddy, @1345635. I am equally as surprised on the lack of community response. Whether good or bad, with most (if not all) DAOs, there is community response to proposals like these

7

Hello @pete,

I am impressed by your proposal and keen on exploring the possibility of listing OUSD on the Strike platform. Could we arrange a discussion to delve into the details further?

Thank you.

1 Like
8

Hi Nick, yes we can discuss this - could you please book a time on my calendar here: Calendly - Peter Origin Protocol

9

i support this as well

1 Like
10

@nick, according to this poll, the community supports adding OUSD to Strike: https://twitter.com/strikefinance/status/1722047442198118668?s=46&t=jvSjVT2CDgOV_R0Fc8IZAg