Origin Dollar is 100% collateralized by USDT, USDC, and DAI.
UST and Terra (LUNA) crashed this past week triggering a cascade of liquidations and fear throughout crypto markets. People have asked if Origin Dollar (OUSD) could crash in a similar way, and the answer is a resounding no.
There was never any collateral backing UST. Minting new UST requires LUNA to be purchased and burned, which reduces the supply of LUNA and drives its price upwards. To redeem UST, LUNA is created and sold. This reduces the price of LUNA, which also means that the next redeem of UST will have to create even more LUNA per UST, which will further accelerate the price downwards. The mint/redeem mechanism that drives prices up when things are good for UST also rapidly drives the price to near zero when there is a potential reduction in future UST supply.
In contrast, OUSD is designed to be fully backed, all the time. To mint OUSD, you must put in an equivalent dollar value of stablecoins (USDC, USDT, or DAI), and then these stablecoins stay in OUSD until it is redeemed. OUSD is backed by these stablecoins, and this remains true even during a supply reduction.
UST’s “APY” was creating more UST out of the air. Just a number going up. And each dollar of this created money increased the likelihood of a death spiral.
OUSD’s yield is earned by providing liquidity to AAVE, Compound, and Curve. These earnings, which result from interest, trading fees, and farming reward tokens, are then distributed to all OUSD holders as a balance increase every day. OUSD remains backed 100% at all times.
In short, UST required everyone to believe that the total supply of UST would continue to go up or the entire system would death spiral.
OUSD requires no belief in OUSD. Anyone can redeem OUSD at any time for funds that are already there. Those who held OUSD through last week have not suffered any losses, and have, in fact, gained a high double-digit APY from the market volatility.
As a team, we are building for the long term — for up markets and for down markets. OUSD is designed with the same goal in mind.
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