Oxygen (O2) Liquidity Layer
Last updated
Last updated
Initial liquidity for new dApps such as Perps, Dexes, and Lending protocols is costly, with most protocols paying a significant proportion of their own token incentives to bootstrap sufficient initial liquidity before users can effectively interact with their platforms in sufficient size.
Ozean is introducing the Oxygen Liquidity Pool (O2 LP), to mitigate costs associated with bootstrapping liquidity at the application level. O2 LP is a liquidity layer that connects tokenised treasuries, RWAs, and the most liquid crypto assets (BTC, ETH, SOL) to trading platforms and money markets as a Liquidity Pool / Collateral.
Collateral for Trading / Perp Dexes
On-chain dexes - Velodrome, Uniswap, Curve
Over-collateralized CDP style stablecoin issuance (such as DAI)
Money markets lending and borrowing - Morpho, Curve
Yield strategy vaults
An index fund of tokenised treasuries, RWAs, and select crypto assets
Yield generated from staked crypto assets (stETH, stCPOOL, etc)
A proportion of fees generated from trading activity, collateral provisions, funding costs, etc
The liquidity layer will maintain the following soft target weights:
wBTC - 30%
ETH - 20%
Solana - 5%
Staked Clearpool - 5%
Yield Bearing Stables (USDY, USDM, ozUSD) - 40%
Ozean will propose target weights to the community through $CPOOL governance voting, as determined by the community. The weights will be maintained by the market through incentivising mints/redemptions for underweight/overweight constituents (lower/negative fees) or disincentivizing mints/redemptions for overweight/underweight constituents (higher fees)
Exposure to a basket of high liquidity crypto majors (BTC, ETH, SOL), Treasury Yields and boosters from each primary issuer (ONDO, additional USDM, ENA), and staked crypto asset yield (stETH, stCPOOL, etc).
Ozean points (droplets) accrual for future rewards.
A majority portion of fees accrued passed back to liquidity pool contributors.
Fee-free passive portfolio management access.
Bootstrapped, off-the-shelf liquidity available, without having to contribute a large portion of native token treasury.
Diversified liquidity, attracting a user base that is averse to new token exposure.
Rebalancing the token weighs in the O2 Index. Fees based on action improving the balance of assets or reducing them, would benefit O2 Index holders.
Minting and redeeming of $O2 incurs a dynamic fee based on whether the selected asset is currently over or under-weight.
Base fee for swapping / buying into $O2 index would be 0.1% (10 bps) to cover swap fees and rebalancing.
The fees to mint $O2, burn $O2 or to perform swaps will vary based on whether the action improves the balance of assets or reduces it. For example, if the index has a large percentage of $ETH and a small percentage of $USDC, actions which further increase the amount of $ETH the index has will have a high fee while actions which reduce the amount of $ETH the index has will have a low fee.
Under balanced assets could have fees discounted to as low as 0.01% - 0.05% to mint $O2.
Price feeds for the basket of assets would be used for the Virtual Price of the Liquidity Pool index.
Virtual Price = Sum of all O2 Assets (in USD) given by oracle / Total Quantity of O2 in circulation
Market Price = Virtual Price + Market assigned premium (Once minting caps are reached)
Users can mint new $O2 and redeem (burn) $O2 at the virtual price. Calculated from reliable oracle prices for the basket of assets.
You may sell your O2 for the Market Price at any time. If the Market Price is below the Virtual Price, your O2 tokens are redeemed (burned) at the virtual price instead of sold at the market price.
