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How It Works
100% Backed and Stable
Origin DeFi's OTokens are ERC-20 tokens for the Ethereum network.
OUSD is a stable currency that is backed 1:1 by USDT, USDC and DAI. As a result, 1 OUSD should always be very close to 1 USD in value.
OETH is a stable currency that is backed 1:1 by ether and liquid staking tokens like stETH, rETH, and sfrxETH. As a result, 1 OETH should always be very close to 1 ETH in value.
1 OUSD = 1 USD
1 OETH = 1 ETH
The Origin dapps will intelligently route users' transactions to give them the best available price while taking slippage and gas costs into consideration. This means that the dapps will sometimes encourage users to buy OUSD or OETH that is already in circulation versus minting new coins from the vault. The dapps will choose from multiple sources of liquidity and will suggest the option that gives the user the best possible rate.
Users can redeem their OUSD or OETH for the underlying collateral at any time. Just as with buying, the Origin dapp will intelligently route users' transactions to give them the best available price while taking slippage, gas costs, and the vault's exit fee into consideration. This means that the dapps will often help users sell their OUSD or OETH on AMMs instead of redeeming with the vault and incurring the protocol's exit fee.
A small exit fee is charged upon redemption of OUSD (0.25%) or OETH (0.5%) via the vault. This fee is distributed as additional yield to the remaining participants in the vault (ie. other OUSD or OETH holders). The fee serves as a security feature to make it difficult for attackers to take advantage of lagging oracles, preventing them from siphoning stablecoins from the vault in the event of mispriced underlying assets. The fee exists to incentivize long-term holders over short-term speculators.
Upon redemption, the vault will determine which coins to return to the user. The vault will return coins in the same ratio as the current holdings. This lack of user optionality protects the vault in the event that any of the supported stablecoins loses their peg.
For example, If the vault contains 25% stETH, 32% frxETH, 35% rETH, and 8% WETH, you'll get these coins in the same proportions upon redemption.
Redemptions incur an exit fee and the user doesn't get to pick which coins they receive. Users can often avoid this fee by swapping on an exchange instead.
The smart contracts generate yield by deploying the deposited collateral into trusted DeFi protocols such as Curve, Convex, Balancer, Compound, Aave, and Morpho. There may be new diversified strategies added to the vault in the future as approved by governance. Earned interest, trading fees, and rewards tokens are swapped and reinvested to produce yield on OTokens. Over time, the protocol will rebalance assets between different earning strategies in order to maximize yields. Users are able to benefit from faster compounding and rebalancing of assets as the farming costs are shared across the entire pool.
The generated returns are passed on to OToken holders via constant rebasing of the money supply (up only). Both coins constantly increase their money supply in response to the yield the protocol has generated. This allows the price of OUSD to stay pegged at 1 USD and OETH to stay pegged at 1 ETH while the balances in token holders' wallets adjust in real-time to reflect yields that have been earned by the protocol.
The end result is tokens that are easy to spend, earn outsized risk-adjusted yields automatically, and are more desirable to hold than ether, stablecoins, or liquid staking tokens.