What is Oikos.Exchange?
This mechanism solves the liquidity and slippage issues experienced by DEX’s.
Oikos currently supports synthetic fiat currencies, cryptocurrencies (long and short) and commodities.
This means traders can borrow Synths against their TRX and begin trading immediately, rather than needing to sell their TRX.
Staking TRX requires a collateralisation ratio of 150% and creates a debt denominated in TRX, so TRX stakers mint sTRX rather than sUSD and do not participate in the ‘pooled debt’ aspect of the system.
These are generated whenever someone exchanges one Synth to another (i.e. on Oikos.Exchange). Each trade generates an exchange fee that is sent to a fee pool, available for OKS stakers to claim their proportion each week.
The other incentive for OKS holders to stake/mint is OKS staking rewards, which comes from the protocol’s inflationary monetary policy.
OKS tokens have a built-in inflationary supply schedule.
Starting the first year, 1,442,308 OKS will be added every week, with a decay rate of 1.25% starting at week 40 and running for 194 weeks.
This ensures Synths are backed by sufficient collateral to absorb large price shocks. If the value of OKS or Synths fluctuate, each staker’s C Ratio will fluctuate.
If it falls below 800% (although there is a small buffer allowing for minor fluctuations), they will be unable to claim fees until they restore their ratio.
For example, if 100% of the Synths in the system were synthetic Bitcoin (sBTC), which halved in price, the debt in the system would halve, and each staker’s debt would also halve.
This means in another scenario, where only half the Synths across the system were sBTC, and BTC doubled in price, the system’s total debt — and each staker’s debt — would increase by one quarter.
In this way, OKS stakers act as a pooled counter-party to all Synth exchanges; stakers take on the risk of the overall debt in the system.
The lack of an order book means all trades are executed against the contract, known as P2C (peer-to-contract) trading. Assets are assigned an exchange rate through price feeds supplied by an oracle, and can be converted using the Oikos.Exchange dApp.
Our fiat Synths include sUSD, sEUR, sKRW, and many more; our commodity Synths include synthetic gold and synthetic silver, both measured per ounce; our cryptocurrencies include sBTC, sTRX, and sBNB, with more to come; and our Inverse Synths inversely track the price of those available cryptocurrencies, meaning that when BTC’s price decreases, iBTC’s price increases.
OKS staker wants to exit the system or reduce their debt and unlock staked OKS, they must pay back their debt. At its simplest: a staker mints 10 sUSD by locking OKS as collateral, and must burn 10 sUSD to unlock it.
This measures the OKS staker’s proportion of the debt pool at the time they last minted or burned, as well as the debt change caused by other stakers entering or leaving the system.
The system uses this information to determine the individual debt of each staker at any time in the future, without having to actually record the changing debt of each individual staker.
The Debt Register holds the Cumulative Debt Delta Ratio, which is the product of the calculation above, and the relative time (index) the debt was added, so that it can be used to calculate any user’s % of the debt pool at any index in the future based on the % shift in the debt pool their last mint/burn caused.
Oikos is still an experimental system and complex systems require both empirical observations and theoretical analysis.
Empirical observation and theoretical analysis ensure the mechanism design aligns incentives for all players.
As previously explained, this debt can fluctuate due to exchange rate shifts within the system. This means that to exit the system and unlock their staked OKS, they may need to burn more Synths than they originally minted.
This decision has been made to ensure efficient implementation of the project. One example of centralization is the use of proxy contracts across much of the architecture.
This is to ensure the system can be upgraded easily but confers a level of control to the engineering team which requires trust from users. While these aspects will be phased out over time, it is important to understand the risks inherent in the current system architecture.
This includes crucial areas such as our price feeds. We will are planning to eventually use Chainlink, a provider of decentralised oracle solutions.
Another aspect of this process is a move to a formal change management process, we have introduced SIP’s (Oikos Improvement Proposals) to allow the community to introduce change requests and to ensure that any changes to the system are well understood and considered by all stakeholders.
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