$ozUSD
Last updated
Last updated
$ozUSD is a revolutionary yield-bearing stablecoin native to the Ozean ecosystem. Users have the option to lock their $USDX, converting it into $ozUSD, which then begins to automatically rebase in their wallet, distributing the risk-free rate directly back to holders.
This unique mechanism bypasses current complexities in DeFi, allowing users to passively earn yield without needing to engage with external protocols. The design decision is aimed at making Ozean more intuitive and accessible with a seamless Web2-like experience, especially useful for users transitioning from traditional finance to DeFi.
By offering a native yield generation feature, $ozUSD stands out as a more convenient and user-friendly option compared to other alternatives available. Users benefit from a consistent, rebasing yield distribution without the risk of losing funds in volatile DeFi pools or navigating complicated smart contracts. The simplicity and efficiency of $ozUSD drives greater adoption within the ecosystem, attracting both passive investors and active DeFi participants.
$ozUSD Use Cases:
Rebasing Real Yield
Through the process of yield concentration (described below), $ozUSD provides a higher yield than what is offered by traditional treasury bill yields (currently ~5%) without engaging with external protocols.
Use in DeFi as an ERC20 token
Unlike $USDX on Ozean, $ozUSD is a rebasing ERC20 token and can easily be permissionlessly used across the rich Ozean DeFi ecosystem.
While $USDX and $ozUSD are closely linked there are some important differences. $USDX is the gas token for the Ozean L2, similar to ether on Ethereum mainnet. In contrast, $ozUSD is an ERC20 token that rebases, much like Lido's stETH, in order to efficiently and evenly distribute yield to token holders.
The ratio of $USDX : $ozUSD is maintained at 1 : 1 via economic incentives and deep onchain liquidity.
Every $USDX is backed by short-term (3 month) U.S. treasury bills (held offchain), cash in a regulated tier 1 bank, or cash-equivalents (USDC), which means that the same can be said for $ozUSD given that $USDX is exclusively used to mint $ozUSD at a 1 : 1 ratio. The yield generated from these off-chain treasury bills is utilized to mint additional $USDX tokens on Ethereum mainnet. This process allows the system to continually generate value, which is then bridged to the Ozean L2 and deposited directly into the $ozUSD contract. In this way, $ozUSD is designed to rebase and distribute the accrued offchain yield among users.
Yield Concentration is the process of only distributing the treasury bill yield to $ozUSD token holders, despite all $USDX being backed by these offchain assets. The fewer people that deposit their $USDX into the $ozUSD contract, the higher the yield they will recieve. And conversely, as more people deposit the yield is proportionally decreased for each user. In this way, the yield offered to $ozUSD holders can greatly exceed the yield received from simply holding treasury bills oneself. Notice, also, how this is achieved without introducing any significant additional risk given that the yields do not derive from additional loans to any third parties.
As an example, suppose there exists 100M $USDX on Ozean, backed by offchain treasury bills yielding 4%. Suppose further that only 20M $USDX is deposited to the $ozUSD contract. Under this scenario, the yield $ozUSD token holders will receive via daily rebasing is 20%, which is 5 times higher than what is offered by the treasury bills. Put differently, the 20M $ozUSD rebases from the yield backing the 100M $USDX.
