As a yield-generating protocol, OUSD continuously integrates new strategies and protocols to ensure the best risk-adjusted yields are captured for holders. Strategies are always market-neutral, making sure that funds are never risked on speculative positions.
The new integration with Morpho allows the protocol to generate yields above or equal to strategies on AAVE and Compound.
By matching lenders and borrowers in a peer-to-peer, way Morpho can create higher capital efficiency, resulting in higher rates for lenders and lower rates for borrowers. For example, if a lender supplies 100k worth of DAI on Morpho and someone borrows it, Morpho could set the rate at 2%, allowing the lender to earn more than they would on AAVE and the borrower would pay less.
If a lender’s capital is unable to find a willing borrower, that capital is simply sent to AAVE or Compound. Once there is demand to borrow capital, Morpho pulls that capital back from AAVE or Compound and lends it. This mechanism allows Morpho to offer equal or higher interest rates for lenders.
Morpho allows lenders and borrowers to be matched peer-to-peer, unlike AAVE or Compound which has a peer-to-pool model. The peer-to-pool model allows lenders to pool their funds into a lending pool, which is tapped into whenever a user would like to borrow from it. This model usually has an oversupply of lending capital compared to the amount of borrowers, so interest paid by borrowers is split into smaller cuts per dollar supplied.
For example, if a lending pool has $3m worth of capital supplied and $2m is borrowed paying a 6% interest rate, lenders will receive an interest rate of 4%. If there is $6m supplied and $2m borrowed paying 6% again, lenders will receive an interest rate of 2%. You can see that the more capital supplied, the less interest each lender receives. Note that this is not an exact example on how AAVE and Compound works, as they have a formula for interest rates based on the utilization percentage of the lending pool.
The oversupply of capital usually results in a spread between the interest rate the lender receives and the interest rate the borrower pays i.e. 1.27% lending rate and 2.71% borrowing rate on AAVE/DAI at the time of writing.
In addition to the vanilla lending strategies on AAVE and Compound, and market making strategy on Convex and Curve Finance, OUSD has added new Convex strategies and the Morpho integration. By constantly analyzing, developing, auditing and deploying new strategies, OUSD ensures holders receive the best risk-adjusted returns in DeFi.
By adding these strategies, OUSD’s 30-day trailing average yields have increased from <3% to >7%, a much higher rate than other blue-chip DeFi platforms offer. Unlike centralized platforms, OUSD strategies can be viewed transparently on the Ethereum blockchain; there can be no obfuscation on the safety of holders’ funds.
On a risk-adjusted basis, it is not farfetched to say OUSD offers the best stable yields in crypto.
OUSD maintains our philosophy of security first, allowing our users to safely earn passive income. In spite of recent events, OUSD remains untouched and continues to generate yield for holders.
OUSD’s integration with Morpho is preceded by the fact that it has been audited by multiple third-parties numerous times, with further reviews from OUSD’s in-house engineers. New market-neutral strategies are being built constantly and can be monitored on our governance page.
If you would like to earn passive yield directly sent into your crypto wallet, OUSD can be acquired through a decentralized exchange aggregator like matcha.xyz, centralized exchanges such as Kucoin or Gate.io, or use our own app on OUSD.com.
