OUSD: The Next Step for Optim Finance

Optim Finance continues to push the boundaries of decentralized finance (DeFi) with its upcoming release of OUSD, a groundbreaking yield bearing stablecoin solution for the Cardano ecosystem. Built upon the success of OADA, OUSD continues the two-token system design to provide passive yield opportunities and peg stability, offering a flexible, high-performance stablecoin yield product for Cardano DeFi enthusiasts and newcomers alike.

A Two-Token System for Yield Generation

Similar to OADA, OUSD operates with a two-token structure:

1. OUSD — This token is pegged to USD and serves as the base asset in the system.
2. sOUSD — This staked version of OUSD is not pegged to USD but benefits from the system’s yield generating AMOs.

Users can deposit stablecoins to mint OUSD. Once minted, they have the option to stake OUSD in exchange for sOUSD, unlocking passive yield opportunities within the system. This staking mechanism mirrors the dynamics of OADA, where users stake their tokens to earn passive yield from the system.

Expanding Flexibility: Multi-Stablecoin Reserves

One of the standout features of OUSD is its flexible reserve system. Unlike OADA, which relies on a single asset pool, OUSD can be backed by multiple stablecoins, allowing for more dynamic reserves. This flexibility provides several benefits:

• Increased Market Access: by utilizing multiple stablecoins for reserves, OUSD will enable greater flexibility and capital efficiencies for users and other protocols. Users will not have to swap between stablecoins to take advantage of OUSD, and protocols will not need to rely on integrations of multiple stablecoins for various purposes.
• Expanded Yield Opportunities: Various stablecoins throughout the ecosystem will each have their own potential mechanisms for yield generation. As more stablecoins come to the ecosystem, OUSD has the opportunity to expand its yield potential with new integrations and abstract away the complexity of yield generation for dollar assets
• Risk Mitigation: Multiple stablecoins can be used to mint OUSD, offering greater risk distribution across multiple assets rather than relying upon a single token for its reserves.

OUSD’s multi-asset reserves enforces robust system parameters to capture the strengths of each stablecoin. Initially, the system will take a conservative approach, using only highly reliable stablecoins with minimal depegging risk. Strict collateralization and risk management protocols will be implemented from the start. As the system evolves and more data is collected, advanced risk models will enable the safe integration of stablecoins with diverse risk-reward profiles, enhancing yield opportunities without compromising stability. The system evolution will be controlled by ODAO vote as all asset deployments and integrations are executed via on-chain, autonomous smart contracts.

Yield Opportunities

The primary sources of yield for sOUSD holders will come from a range of Algorithmic Market Operations (AMOs) and capital-efficient strategies:

1. DEX AMOs

OUSD will feature AMM stableswap pools for each asset used to back it in reserve. For each stablecoin used to back OUSD, there will be a corresponding OUSD paired AMM pool that the protocol will arbitrage to ensure peg stability and generate yield. This is very similar to the OADA system and its OADA/ADA stableswap AMO on Splash — but with each reserve stablecoin asset having its own corresponding stableswap pool.

2. Borrowing AMO

An exciting addition to Optim Finance’s suite of products is the upcoming Borrowing Module. This protocol will allow users to deposit collateral assets such as qADA, OADA/ADA LP, and other tokens to mint OADA as a collateralized debt position (CDP). This module opens up new capital-efficient trading strategies, which have not yet been available on Cardano.

This module will be extended to OUSD minting via the deposit of stablecoin collateral assets, LP positions, and possibly other Cardano Native Tokens. As we have seen from recent market utilization on Liqwid and other lending platforms, borrow demand for stablecoins on Cardano has been very high, yielding a consistent 10–20% APY on deposits. OUSD Borrow will capitalize on this demand. The interest and fees paid to the system by borrowers represent a primary source of yield generation for the system.

3. Liqwid Lending Strategy

The OUSD system will also be able to deploy idle stablecoin reserves into Liqwid’s lending markets, depending on market demand and yield potential there. This integration with Liqwid enables OUSD to utilize its reserves for capital efficient yield generation, reinforcing the system’s overall yield potential.

Conclusion

OUSD seeks to capitalize and build on the success of OADA, and it represents a significant step forward for DeFi on Cardano, providing a stable, yield-bearing asset with flexible reserve backing. The integration with multiple stablecoins and yield sources makes OUSD a dynamic and versatile tool for DeFi participants as well as other protocols.

Stay tuned as Optim Finance prepares to release OUSD and unlock the future of stablecoins on Cardano.