Exploring Origin Protocol
Origin’s OTokens serve as a powerful tool for users, offering the opportunity to earn additional sustainable yield on stablecoins and LSTs.
Overview
What is Origin Protocol?
Origin Protocol’s DeFi arm, Origin DeFi, brings two interesting products to the table: Origin Dollar (OUSD) and Origin Ether (OETH). Appropriately dubbed ‘OTokens,’ they both aim to provide increased benefits to users, such as higher returns, self-custodian control, and passive returns. What sets them apart is the elimination of complex staking processes, the absence of lock-up periods, and continuous compounding.
Firstly, OUSD is a stablecoin pegged to the US Dollar, designed to optimize user dollar wealth, while OETH as the name suggests tracks the value of ETH with its main job being to maximize the accumulation of ETH.
Although they both share the same core contracts, their differences lie in the backing collateral they utilize. OETH uses ETH as well as LSTs (Liquid Staking Tokens) instead of a basket of stablecoins like OUSD. It’s important to note that 1 OETH is always equal to 1 ETH, and much like Vesper, Origin prioritizes security. This is evident in the eight rigorous audits for OUSD and ten for OETH’s smart contracts.
So how is this even possible? Quite simply, Origin is able to accomplish this through diverse yield-generating strategies (such as Curve, Aave, and Compound), which enables continuous earning and compounding without any need for the user to intervene.
What ends up happening is users are able to seamlessly earn competitive returns from a variety of LSTs and DeFi strategies, through a unique up-only rebasing approach. At the same time, they maintain the flexibility to move and use their assets without the hassle of exiting complex positions or dealing with hefty gas fees.
What is OUSD?
Now, most of us are familiar with the concept of stablecoins, like USDT, which are backed by the US Dollar. Yet, Origin noticed a gap: while stablecoins are stable, they don’t inherently generate yield. To address this, as mentioned above, Origin devised OUSD, a currency that enables users to earn yield on stablecoins passively in a risk-adjusted manner from DeFi blue-chips, all available in their wallet of choice. Traditionally, if you wanted to generate yield from your stablecoins, you’d have to lock them in a smart contract, sacrificing their liquidity.
For instance, if you were looking to create passive income from your idle USDC, you might deposit it into a lending protocol like Aave or yield aggregator such as Vesper. While this works for those content with letting their capital sit and accumulate benefits, it’s less than ideal for those who’d like to actually utilize their assets more dynamically, all while still earning yield. Origin’s solution to this issue is OUSD.
Although it’s still a stablecoin and maintains its peg with the US Dollar, it stands apart by offering liquidity and the ability to earn yield while being actively utilized across DeFi. The process is relatively simple: Origin Dollar’s stablecoin collateral is sent to whitelisted DeFi strategies based on OGV stakers weekly allocation votes. Origin DeFi Governance (OGV) stakers also accrue fees from the protocol and manage the OGV DAO treasury. In order for new DeFi strategies to be added to OUSD, a proposal to add the strategy must pass through governance.
As you hold your OUSD, your earnings automatically increase and compound, with no manual action required. You don’t need to stake tokens or lock them up, simply sit back and watch your balance grow.
An advantage of OUSD is the fact that it does not have the same issues maintaining its peg, unlike traditional stablecoins. The streamlined process of minting and redeeming OUSD encourages arbitrators to ensure the coin retains its value. In the same way, OETH can always be exchanged for an equivalent amount of ETH collateral whenever needed.
This simplicity eliminates the need for complex return calculations, making OUSD an appealing choice for both seasoned DeFi pros and those new to the DeFi space.
What is OETH?
As their names suggest, OETH and OUSD share many similarities. They’re like siblings in the Origin family. But there’s one important difference: OETH is a token based on the value of Ether, while OUSD is tied to the US dollar. OETH leverages liquid staking yield to boost potential earnings through strategies in DeFi, and offers additional rewards.
Now, you might remember the Shapella upgrade back in April. It was a game-changer, enabling people who had staked their ETH to finally start withdrawing. This helped boost staking deposits in the Ethereum ecosystem and is expected to continue rising. But with dominant players like Lido and Coinbase holding most of the power, there are risks. If regulators were to take action, it could cause problems for the whole network. That’s why it’s important to spread staked funds across multiple strategies or LSTs, reducing the risk and potentially making for better returns. OETH helps users do just that, offering a simple way to diversify and potentially increase their yield, all while being exposed to a variety of LSTs.
So how does OETH actually earn yield? Origin Ether uses the power of liquid staking tokens — specifically, stETH, rETH, and sfrxETH to earn a base yield. Then, ETH is allocated to whitelisted DeFi strategies to earn yield. The OETH-ETH pool is a good example of how it works. When OETH was launched, it made use of an AMO strategy on platforms such as Curve and Convex. This approach enabled Origin Ether to accumulate extra trading fees and rewards tokens, in addition to the standard validator rewards.
Summary
In essence, Origin introduces a new approach to improving the DeFi landscape with its OTokens. OUSD and OETH redefine earning potential by simplifying and automating the staking process, eliminating lock-up periods, and enabling continuous compounding.
With its seamless integration and use of diverse yield-generating strategies, Origin is providing a future where users can take advantage of optimized returns while maintaining control and flexibility over their assets. Both novices and seasoned DeFi enthusiasts can appreciate this approach as it blends simplicity, liquidity, and yield-earning potential altogether. In a world where maximizing gains is key (especially in a bear market), Origin provides a solid solution that merges the best of stability and growth.
