How USDO Works
OpenDAO’s flagship stablecoin.
USDO is a collateral backed stablecoin pegged to the US Dollar.
Alongside USDO we will also be launching AUDO, EURO, JPYO, SGDO, INRO etc in quick succession.
USDO is live on BSC: https://bscscan.com/token/0x5801d0e1c7d977d78e4890880b8e579eb4943276#balances
USDO is minted via community votes (post decentralization) but it does not come in circulation automatically. On minting it can only be supplied as an asset to be borrowed from the OmniCOMP money market.
The OCP team received a 50000 $OPEN grant from OpenDAO to build infrastructure for USDO and other stablecoin suites on BSC.
You can find out more about OCP here: https://ocpcorp.eth.link
On OCP’s OmniCOMP (https://omnicomp.ocp.finance) users can supply various assets as collateral and borrow USDO.
The USDO can then be swapped for any other stablecoin via Value Defi’s vPegSwap.
Note that the borrowing here is called minting because this is how the USDO comes in circulation.
Minters have to pay a fee for borrowing and this fee can be adjusted to influence supply and demand of USDO and bring it closer to the peg. Adjustment of fees is done via community votes.
The overcollateralization and adjustment of annual fee rates is the first mechanism to influence the peg.
USDO is always overcollateralized, backed by assets such as PBTC, BNB, Cake, and other stablecoins.
Several other crypto assets will be added as collateral over a period of time including OPEN DAO partners such as OCEAN, ALGORAND, ELROND, BDP etc. A bridge to BSC via pNetwork will be setup for each of them.
The second mechanism is a backstop token like MKR which earns fees and can be used in a debt auction in the event of a blackswan event.
OPEN tokens cannot be used directly for this because they are a fixed supply token which cannot be used for burning and new minting as needed. A new token that is completely owned by OPEN token holders will be established for this purpose.
USDO will always be redeemable for $1 worth of the backstop tokens. Similar to how sUSD can be redeemed for $1 worth of SNX, or like how UST can be redeemed for $1 worth of LUNA (Terra).
The third mechanism involves a trading system. This is again being developed by the OCP team under a separate OPEN token grant and is a fork of Bancor v2.
Bancor v2 is unique because it has the following attributes:
- No impermanent loss for LPs
- No slippage
- Allows for an Oracle and price fixing for assets
The first 2 attributes are attractive by themselves, but the 3rd one makes it most useful for us.
On the trading system USDO will be used instead of BNT and make it as the base pair — giving it utility and demand. Prices of other currencies such as AUDO, INRO etc will be read via an Oracle and fed into the trading system.
This trading system not only gives the currency demand and liquidity but also fixes their peg automatically.
The 3 tier pegging mechanism should mean that USDO and the other stable coins will enjoy a strong peg and demand.
Main Site: https://OpenDAO.io
White Paper: https://opendao.gitbook.io/whitepaper-v2/
Transparency Document: https://opendao.gitbook.io/transparency/