Stablecoin Overview: Origin Dollar (OUSD)
by Valentin Kalinov on Jul 21, 2022 2:05:14 PM
Launched in September 2020, Origin Dollar (OUSD) is a collateralized stablecoin that generates yield passively. OUSD is 1:1 backed by other stablecoins. Currently, the protocol accepts DAI, USDT and USDC as collateral. As a result of such strategy, 1 OUSD should always be very close to 1 USD in value. One could say that OUSD automatically earns yield for the token holders. Instead of the price increasing as the value of the assets under management increases (as with Compound cTokens or Yearn yTokens), the value of one OUSD remains constant at approximately $1. The idea is to remove the complexity of managing your own stablecoin strategy and outsource it to Origin Dollar. The protocol manages a number of yield optimizing strategies and will move assets in and out of different liquidity pools to provide the best yield to the holders of OUSD.
Authors: Valentin Kalinov, Christian Viehof
OUSD is basically a stablecoin that automatically rebalances in your wallet while passively generating a yield. By holding OUSD, owners will notice the wallet’s balance slowly increasing. When minting OUSD, users deposit other stablecoins, which are automatically deployed across the DeFi ecosystem. These strategies include lending assets on Compund and Aave or automated market making (AMM) on Curve. The generated returns are passed on to the holders of OUSD via constant rebasing of the money supply. The protocol continuously adjusts the token supply in response to the generated yield (the supply gets rebased several times per day). Rebasing will only increase supply since the amount of OUSD minted is tied to the realized gains earned by the underlying strategies. The value proposition of OUSD is ease of use. The only requirement to earn yield is just to buy OUSD and let it sit in a wallet. The protocol has a few caveats. Users can convert their OUSD back into other stablecoins at any time. However, the protocol charges a 0.25% exit fee and distributes the earnings to the remaining OUSD holders. The idea of the fee is to reward long-term holders and punish speculators. There is one question that comes up in the head of the average DeFi investor: Why not hold OUSD and also deploy my tokens on DeFi protocols for additional earnings? For example, providing liquidity on Uniswap. When locked in other smart contracts, the supply of OUSD does not change because many protocols are not designed with rebasing tokens in mind. For example, it will be very difficult to design a DAI alternative where the collateral of DAI rebases constantly. Smart contracts must explicitly opt-in to receiving yield via the rebasing mechanism.
Wrapped OSD (wOSD)
Wrapped OUSD provides a non-rebasing version of OUSD that still earns yield. wOSD addresses the problem of the rebase mechanism of OUSD and allows holders to deploy it across DeFi protocols such as Uniswap. Eliminating the rebasing mechanism also could provide tax benefits in some jurisdictions. The yield is earned when holders unwrap their wOSD back into OUSD. wOUSD is one of the first implementations of EIP-4626: Tokenized Vault Standard. The standard lowers the integration effort for yield-bearing vaults.
Origin Dollar is part of the Origin Protocol and is one of the many projects managed by the team. All projects are governed by the OGN governance token. Anyone with at least 1,000 OGN in their wallet can create a new proposal. Users can lock their OGN tokens to earn additional OGN after a certain time elapse. For example, a 90-day staking period would earn 12.5% annualized interest. This, of course, introduces the problem of inflation for the OGN token because the total supply increases after each staking period.
The classification of OUSD according to the ITC:
Economic Purpose (EEP): OUSD is listed as a fiat-pegged payment token (EEP21PP01USD) similar to the other stablecoins in the industry.
Industry Type (EIN): The issuer of OUSD is active in the field of Payment Services and Infrastructure (EIN06PS). However, there is a case to be made for Investment and Asset Management (EIN06AM), but since the main role of OUSD is to keep its peg to the US dollar and be used for payments, we would pick EIN06PS.
Technological Setup (TTS): OUSD is an Ethereum ERC-20 Standard Token (TTS42ET01). The Class “Ethereum ERC-20 Standard Token” captures every token that is implemented by means of the ERC-20 Standard on top of the Ethereum blockchain.
Legal Clam (LLC): The OUSD token does not entitle its holder to any legal claim or rights against the issuing organization; therefore, it is listed as a No-Claim Token (LLC31).
Issuer Type (LIT): The dimension “Issuer Type” provides information on the nature of the issuer of the token. OUSD is built by Origin Protocol Labs, its Issuer Type is a Private Sector Legal Entity (LIT61PV).
Regulatory Framework (EU) (REU): The dimension “Regulatory Status EU” provides information on the potential classification of a token according to the European Commission’s proposal for a Regulation on Markets in Crypto Assets (MiCA, Regulation Proposal COM/2020/593 final). The OUSD token qualifies as a Non-Authorized Significant E-Money Token (REU51EM12) according to the definition provided in Article 3 (5) of Regulation Proposal COM/2020/593 final.
The International Token Standardization Association (ITSA) e.V.
The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.
- The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
- The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to the market capitalization of classified tokens.
- ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.
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Valentin Kalinov is an Executive Director at International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database, including a classification framework and unique token identifiers and locators. He has over five years of experience working at BlockchainHub Berlin in content creation and token analysis, as a project manager at the Research Institute for Cryptoeconomics at the Vienna University of Economics and token analyst at Token Kitchen. You can contact Valentin via email@example.com and connect on Linkedin if you would like to further discuss ITSA e.V. or have any other open questions.
Christian Viehof is an Executive Director at the International Token Standardization Association (ITSA) e.V., working to create the world’s largest token database including a classification framework and unique token identifiers and locators. He completed his Bachelor in Economics at the University of Bonn, the Hong Kong University and the London School of Economics and Political Science with a focus on Behavioral Economics and Finance. Currently pursuing his Master of Finance at the Frankfurt School of Finance and Management, you can contact him via firstname.lastname@example.org and connect with him on Linkedin, if you would like to further discuss ITSA e.V. or have any open questions.