How OINDAO’s New Stablecoin Will Accelerate DeFi on NEAR
This year, the NEAR ecosystem and protocol are poised for growth. With Nightshade in Phase 0, NEAR protocol ramping up speed, capacity, and security, it’s never been easier to build on NEAR.
As in 2021, developers are increasingly taking notice and bringing a wide variety of new decentralized applications to the ecosystem — especially in decentralized finance (DeFi).
To help empower DeFI apps, OIN Finance is releasing nUSDO, a new stablecoin that will also further boost the NEAR ecosystem’s versatility. OIN Finance will also be releasing a wNEAR-backed stablecoin on Aurora this week.
OINDAO and Stablecoins
OIN Finance and their stablecoin minting platform, OINDAO, provide a turnkey collateralized stablecoin issuance platform. For NEAR, OIN Finance have kicked things off by collateralizing the stNEAR token, NEAR’s liquid staking token, to create nUSDO.
Before we jump into that, let’s take a step back to better understand stablecoins. There are a few basic types of stablecoin.
The most simple and popular is the fiat-backed stablecoin (USDT), which is a familiar concept to many. Then there are collateralized stablecoins (MakerDAO, for instance), which are backed by a greater amount in collateral. For example, for each USDO that gets created, a minimum of $1.60 worth of stNEAR is used as collateral.
OIN Finance and OINDAO’s feature set is a bit different, though. They have several other mechanisms for pegging USDO, including a stability pool, liquidations, democratizing liquidations, and yield farming opportunities.
The Stability Pool is a place for people to stake their stablecoins. The nUSDO in the Stability Pool will be used to liquidate the vaults (“accounts”) that fall below the minimum collateralization ratio of 160% (those that have less than $1.60 worth of stNEAR for each nUSDO they borrowed).
The nUSDO pays off the debt, and the collateral is transferred into the Stability Pool. Since there is more collateral than debt within a vault, the Stability Pool stakers will receive proceeds from the liquidation.
The OIN community also has a governance model for nUSDO for features like adjusting the Stability Fee (similar to interest rates on debt), which is used to help control the peg.
“There are great yield farming opportunities, as our vaults provide multi-token rewards (for NEAR, we will be giving out wNEAR and META), while the Stability Pool provides OIN incentives and stNEAR proceeds from liquidations,” says Daniel Kwak of OIN Finance.
With nUSDO, NEAR community members can leverage their NEAR assets and use their freshly minted stablecoins as one would use any stablecoin — to transact, to yield farm, or simply to hold and stake.
The nUSDO is collateralized with stNEAR. Users deposit their stNEAR onto the OINDAO, and they’re able to mint (“borrow”) an amount proportional to their deposit. The basic mechanism behind the deposit and minting is similar to MakerDAO.
Since stNEAR is the liquid staking token of NEAR, users don’t face the dilemma of whether to use their NEAR, or to hold onto their favorite coin.
The Fundamental Role of Stablecoins and Adoption
Stablecoins are a vital ingredient in any blockchain ecosystem. Their use in blockchain businesses are critical in creating stable supply and pricing instead of the token volatility people might have seen in press coverage. OIN’s vision, through OINDAO’s nUSDO stablecoin, creates just that for the NEAR community.
Traditional businesses, including Web 2 platforms, require predictable cash flows. If income halved tomorrow or expenses suddenly doubled, business earnings and the ability to pay bills would be adversely affected. Stability on the blockchain will, in time, quell any concerns traditional businesses and investors might have about the crypto industry being too volatile. Stablecoins like nUSDO are crucial in establishing this stability on blockchain platforms such as NEAR, and they will be equally vital in cross-chain business transactions.
A little weariness about crypto volatility isn’t limited to traditional and Web 2 businesses, though. For individual uninitiated users, whether it’s someone looking for a cool NFT artwork or a person dipping their toes into crypto investing, the world of blockchain transactions can feel a bit daunting. Stablecoins like nUSDO provide peace of mind, giving new users an on and off-ramp much closer to the business transactions people use every day without a second’s thought.
Building Out DeFi Infrastructure
On its own, a stablecoin isn’t enough to ensure solid DeFi infrastructure. It must be accompanied by the freedom to use it as the users see fit, and in a wide array of use cases.
The NEAR ecosystem has seen a recent explosion in DeFi applications, from Meta Pool’s liquid staking function, to Ref Finance’s continued growth and services expansion. OIN Finance brings all these together with nUSDO, giving users an easily understandable way to take part in a range of different applications.
OIN Finance’s promise of a turnkey solution is further backed by expanding nUSDO’s reach within the ecosystem by partnering with more platforms, such as Paras (NFT marketplace), Octopus Network (app-chains), and other dapps. With more and more ecosystem partners working to integrate stablecoins into their platforms, value transfers within the NEAR ecosystem will become more seamless and approachable for users. This will lead to more traditional businesses being willing to adopt, and DeFi will take its next steps within NEAR.
In 2022, the nUSDO stablecoin roadmap will include the Stability Fee adjustments, other governance features, and more use case opportunities. Currently, OIN is partnered with NFT marketplace Paras and Octopus Network for NFT dapps and appchains, while more Gaming dapps are in the pipeline. Additionally, OIN is exploring fiat-traditional business on/off ramps and partnerships when and where available.
This week, OIN will be launching a wNEAR-backed stablecoin on the Aurora platform. OIN Finance is keeping their momentum up by expanding throughout the altcoin world. Through their ecosystem, not only will OIN be seamlessly interoperable with the NEAR Protocol, but also truly leverage cross-chain functions by bridging the DeFi worlds and use cases of both protocols.
With DeFi gaining such a new ally and powerful tool, it will be exciting to see how stablecoins like nUSDO develop on the NEAR ecosystem going forward.
About OIN Finance
OIN is a decentralized stablecoin issuance platform. With a robust set of features such as single-vault liquidations and own-brand-labelled stablecoins, we bring the best stablecoin solutions for all, including our Layer-1 and Layer-2 partners.
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