Meet OUSD: The First Stablecoin That Earns A Yield In Your Wallet

Josh Fraser
Sep 23 · 8 min read
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Today, we’re taking a bold step forward in pushing DeFi (Decentralized Finance) to the masses. We’re excited to launch the Origin Dollar (OUSD) as a superior stablecoin for the Ethereum network. OUSD automatically earns competitive yields from DeFi protocols while it’s still sitting in your wallet.

Because of OUSD’s novel design, no staking or lockups are required to participate in lucrative DeFi strategies. Similarly, you don’t need to unstake or unlock your OUSD when you want to transfer it to another wallet. This both saves you gas fees and makes it much more convenient to switch between earning and spending. Your earnings compound continuously and are reflected in your ever-increasing OUSD balance, while still being available for payments, commerce, and peer-to-peer transactions.

Block by block, second by second, OUSD grows passively for you without requiring you to use other platforms. Both sophisticated DeFi experts and novice users passively earn returns without the typical hassles and complexities of yield farming.

OUSD is a natural extension of Origin’s mission to enable peer-to-peer commerce. We believe having a reliable and desirable stablecoin that leverages the best parts of DeFi while enabling buyers and sellers to transact seamlessly will accelerate the growth of our decentralized commerce platform. OUSD is built by our existing team of cryptocurrency and fintech veterans at Origin Protocol. Team members include serial entrepreneurs with multiple exits, early cryptocurrency investors, early employees at YouTube, engineering managers at Google/Dropbox, and one of the original Paypal co-founders.

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The OUSD Protocol

The contract address for the OUSD token is: 0x2A8e1E676Ec238d8A992307B495b45B3fEAa5e86 (ousd.eth)

OUSD has several essential properties:

  • 1 OUSD = 1 USD
  • 1:1 backed by other proven stablecoins (USDT, USDC, DAI)
  • Generates yield by deploying the underlying assets to a diversified set of DeFi protocols
  • Elastic supply constantly distributes additional units of OUSD to holders
  • 100% open-source, on-chain, and permissionless

We recommend reading through the OUSD docs to get a comprehensive understanding of how the protocol works.

Background

In 1999, Origin’s R&D engineer Yu Pan, along with his fellow PayPal co-founders conceived of creating “the new world currency”, complete with interest yielding strategies and debit cards without having to connect to traditional banking systems. Several pivots and an eBay acquisition later, PayPal dropped its ambitions in this area.

Almost two decades later, Tether introduced the concept of a USD-denominated stablecoin in 2014. Since then, stablecoins have proven themselves as an ideal way of transferring value without exposing users to the price volatility of free-floating currencies. Today, more value is transferred via Tether than with Bitcoin. Stablecoins also play an important role in decentralized commerce as they offer a more practical medium of exchange for both buyers and sellers. The idea of launching our own stablecoin has been something we’ve discussed many times in the past, but until now we’ve never had a good answer on what we could do better than the existing players. We’ve designed OUSD to be the yield-generating asset that has the potential to become a new world currency in the spirit of PayPal’s initial vision.

“OUSD combines the automated farming of Yearn, the elastic supply of Ampleforth, and the ease-of-use of Tether.”

One of the problems in DeFi today is that users have to constantly choose between holding an easily spendable coin and earning yields by locking their tokens up in smart contracts. For example, users that lock up USDC in Aave cannot spend a portion of that USDC simultaneously. Expensive Ethereum gas fees serve as “switching costs” each time those users want to switch between spending mode and savings mode.

To make matters worse, yields from lending and trading activities change rapidly. Sophisticated DeFi yield earners are familiar with constantly having to rebalance their portfolio of assets across many competing platforms. This is time-consuming and expensive as gas fees once again eat into yields. Often the advertised APYs ignore important factors like impermanent loss, and it is time-consuming to calculate real ROIs as APYs are unstable and constantly fluctuating. There isn’t an easy unit of account. Despite the explosion of growth and billions of dollars of capital being locked up in smart contracts across DeFi platforms, it is still way too difficult for many cryptocurrency users to participate.

With OUSD, there’s no need to unwind complicated positions when you want to spend your OUSD. You can transfer it freely without having to pay gas to unlock spendable capital. In addition, OUSD gives you access to compelling opportunities across DeFi with none of the hassles. The OUSD smart contracts deploy your underlying capital to a diversified set of yield-earning strategies, rebalancing over time to achieve strong yields while diversifying risk. Earnings automatically accrue in your wallet and compound continuously while you hold OUSD. Again, no staking or lockups are required, making your OUSD as easy to transfer as any other ERC-20 token. OUSD also serves as an ideal unit of account. DeFi investors no longer need complicated spreadsheets to calculate their earnings as they can easily see their constantly updated OUSD balances in real-time.

This is all possible because OUSD works differently than most ERC-20 tokens. Instead of the price increasing as the value of the assets under management increase, the value of one OUSD remains constant at $1. Instead, our smart contracts increase the monetary supply of OUSD when yield is earned by the protocol. This automatically updates the balance in every token holder’s wallet in real-time. Again, every OUSD is backed by another stablecoin deposited or earned by the protocol.

Think of it as interest accruing in your bank account. The value of a dollar doesn’t change. You just get more of them over time as you earn interest.

Beyond being used as a yield-generating product, OUSD will be integrated into existing and future Origin commerce applications. Beginning today, Dshop merchants and marketplace sellers will be able to accept OUSD as a form of payment. For merchants that have traditionally been skeptical of receiving cryptocurrency payments, being able to accept a yield-bearing instrument that beats traditional savings accounts is a powerful motivator. Today, PayPal boasts over 305M consumers and 22M merchants and processes over $200B of payments in a single quarter. Our aspirations are to begin penetrating that customer base with OUSD and future commerce applications built on top of the protocol.

Strategies

Today’s launch of OUSD will showcase a simple lending strategy built on top of Compound, one of the “money legos” that we’re using to build our platform. We’re taking a more conservative strategy for the first couple of weeks while we ensure our smart contracts are secure and safe. Thereafter, new strategies will be frequently deployed that increase yields while minimizing risk and dependencies. We intend to directly integrate with Compound, Aave, dYdX, Uniswap, Curve, and Balancer, and are also evaluating more complex strategies like Yearn Vaults and new platforms.

We are focused on three types of strategies:

  • Lending fees
  • Automated market maker fees
  • Rewards tokens provided by the above and new DeFi protocols

A word of caution

While we have made our best efforts to attempt to ensure the security of our work, the OUSD contracts have not yet been formally audited. Trail of Bits will be performing an in-depth audit next month, and we encourage people to exercise caution until their review is complete. The smart contracts may contain bugs that could cause the loss of funds. We’d hate for anyone to lose any money, so please take this warning seriously.

Governance privileges and incentives

OUSD is designed to be a decentralized protocol governed by many stakeholders all over the world. We believe that the minters and holders of OUSD should collectively determine important protocol decisions. It is our intent to relinquish control and governance to the community as soon as possible.

That being said, in the very early days, it is imperative that the core engineering team can act quickly and decisively to build the foundational parts of the protocol. For peace of mind, we will be adding a 48-hour timelock in the near future after we have verified everything is working as intended, including the upgradeability of our smart contracts. This will enable the community to audit any protocol changes that are pending.

Decentralization will progress across four phases:

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In the next few weeks, we will be providing more specifics regarding decentralized governance and incentives for OUSD users that help bootstrap the network.

In addition, we also want to ensure high participation from our existing Origin Token (OGN) holders and community of close to 500,000 members. Existing OGN holders will be able to stake their OGN to participate in governance and earn incentives for driving value to OUSD. More details will be provided in the near future.

The strong connection between OUSD and the rest of the Origin commerce platform will fuel growth in both initiatives.

What’s next

Today’s launch is just the start of a new chapter for the Origin Platform and ecosystem. We’ll be sharing additional details on why we built OUSD and how we plan to incentivize both existing and new Origin community members. We’ll also provide the results of our smart contract audits and be fully transparent about how we’re updating OUSD’s yield-earning strategies. We’ll update our community with our plans and timing to gradually relinquish control of OUSD to the community and to create deeper integrations with our commerce products.

For those interested in diving into the technical details of how it works, the OUSD docs are a great place to start. We encourage developers to audit and contribute to our Github (100% open-source). Our team hangs out in Discord if you have questions or need help getting started.

Visit OUSD.com to begin experiencing the future of money for yourself.

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Learn more about Origin:

Origin Protocol

Origin is building the sharing economy of tomorrow.

Thanks to Matthew Liu

Josh Fraser

Written by

Co-founder at Origin. Previously founded EventVue, Torbit & Forage. Engineer & rock climber.

Origin Protocol

Origin is building the sharing economy of tomorrow. Buyers and sellers will be able to transact without rent-seeking middlemen. We believe in lowering transaction fees, promoting free and transparent commerce, and giving early participants in the community a stake in the network.

Josh Fraser

Written by

Co-founder at Origin. Previously founded EventVue, Torbit & Forage. Engineer & rock climber.

Origin Protocol

Origin is building the sharing economy of tomorrow. Buyers and sellers will be able to transact without rent-seeking middlemen. We believe in lowering transaction fees, promoting free and transparent commerce, and giving early participants in the community a stake in the network.

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