
A primer on NFVs and how Non-Fungible Vaults improve CDPs
Despite going through the coldest of crypto winters, DeFi continues to gain leverage over inefficient Tradfi products. Lending, in particular, has found a strong product-market fit, as it enables users to borrow tokens by locking their assets in Collateralized Debt Positions (CDPs). While CDPs create new opportunities to leverage and monetize one’s assets, they’re often inflexible due to infrastructure limitations. Open Dollar resolves these issues by introducing a new way to access and manag...

Why We Need Overcollateralized Stablecoins
In the unpredictable world of web3, stablecoins are consistent. Designed to minimize price volatility, they have become indispensable in bridging the gap between traditional finance and decentralized finance. This article delves into the significance of overcollateralized stablecoins and their pivotal role in ensuring trust and stability.What are stablecoins?Stablecoins, as the name suggests, are digital tokens designed to maintain a stable value. Unlike traditional cryptocurrencies like Bitc...

What is Ungovernance, and why does it matter?
An Analysis of Ungovernance and Its Potential Impact on Protocol Sustainability.On the Nature of UngovernanceDecentralized Finance (DeFi) stands as a testament to the possibilities of blockchain technology in the tapestry of the digital realm. Within this panorama, the philosophical grounding of governance dances back and forth between pillars of decentralization and control – an oscillating, pendulum-like dance which has so far resulted in more questions than answers:How can we tell that a p...
Borrow against Liquid Staking Tokens & Arbitrum native assets with our transparently over-collateralized stablecoin and Non-Fungible Vaults.



A primer on NFVs and how Non-Fungible Vaults improve CDPs
Despite going through the coldest of crypto winters, DeFi continues to gain leverage over inefficient Tradfi products. Lending, in particular, has found a strong product-market fit, as it enables users to borrow tokens by locking their assets in Collateralized Debt Positions (CDPs). While CDPs create new opportunities to leverage and monetize one’s assets, they’re often inflexible due to infrastructure limitations. Open Dollar resolves these issues by introducing a new way to access and manag...

Why We Need Overcollateralized Stablecoins
In the unpredictable world of web3, stablecoins are consistent. Designed to minimize price volatility, they have become indispensable in bridging the gap between traditional finance and decentralized finance. This article delves into the significance of overcollateralized stablecoins and their pivotal role in ensuring trust and stability.What are stablecoins?Stablecoins, as the name suggests, are digital tokens designed to maintain a stable value. Unlike traditional cryptocurrencies like Bitc...

What is Ungovernance, and why does it matter?
An Analysis of Ungovernance and Its Potential Impact on Protocol Sustainability.On the Nature of UngovernanceDecentralized Finance (DeFi) stands as a testament to the possibilities of blockchain technology in the tapestry of the digital realm. Within this panorama, the philosophical grounding of governance dances back and forth between pillars of decentralization and control – an oscillating, pendulum-like dance which has so far resulted in more questions than answers:How can we tell that a p...
Borrow against Liquid Staking Tokens & Arbitrum native assets with our transparently over-collateralized stablecoin and Non-Fungible Vaults.
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USDR, a real estate-backed stablecoin issued by the Tangible protocol, encountered a significant depegging event on October 11, 2023. During which, a sudden rush to redeem the liquid DAI from USDR’s treasury triggered a selling panic. The price of USDR plummeted to a low of $0.5040 per coin, down nearly 50% from the $1.00 peg it targets. Despite the team's commitment to resolving the situation, this incident highlighted a major vulnerability of their stablecoin’s design.
USDR's design relies on users being able to redeem liquid assets (like $DAI) which partially back its value. Real estate holdings make up the rest of the collateral. While this combination does offer a degree of stability, it remains susceptible to abrupt liquidity crises, as evidenced by the depegging. USDR's reliance on maintaining sufficient reserves to meet redemption demands becomes a weakness when these reserves are depleted, leading to major price fluctuations.

Even one of the most liquid and most trusted stablecoins across DeFi, $USDC, fell victim to a bank run in April of this year. The stablecoin depegged as far down as $0.87 (a new all-time-low) during the frenzy.
Many users simply had to hold their rapidly depreciating tokens due to network congestion or being away from their wallets. These vulnerabilities may be “a cost of doing business” to some, but DeFi needs a reliable option that doesn't require accepting the possibility of a bank run.
Open Dollar’s $OD takes advantage of a contrasting design. While always maintaining an over-collateralized ratio of at least 135%, the $OD stablecoin doesn’t rely on liquid reserve redemption to hold its peg. The Open Dollar protocol operates using a dynamic control system, similar to a PID controller. This system continuously adjusts the protocol’s redemption rate to maintain the peg at $1.00, enhancing its resilience to market volatility.
When the market price of $OD deviates from the reference set point of $1.00, the system reacts by modifying the redemption rate up or down depending on the market price. This incentivizes market participants to take actions that restore the peg, ensuring continuous stability.
Open Dollar's mechanism generates arbitrage opportunities when the market price deviates from the redemption price. This incentivizes users to buy or sell $OD, capitalizing on these opportunities for individual profit while aligning the market price with the redemption price at the same time.
Open Dollar's design eliminates dependence on centralized custodians, reducing risks associated with centralized assets. The decentralized nature of the system empowers the community to actively contribute to $OD’s stability without having to worry about the safety of their assets.
Stablecoin depegging events across DeFi emphasize the vulnerability of designs that rely on asset backing & liquid collateral for redemption. Being susceptible to significant price swings when confronted with demand for liquidity is not ideal for long-term confidence. This is precisely why $OD exists: For seamless adjustment to ever-changing market conditions.
We're building the the next generation of DeFi, giving the world access to robust financial tools for lending, productive collateral, and resilient stablecoins. Join our community as we build toward that goal: https://opendollar.com/discord
USDR, a real estate-backed stablecoin issued by the Tangible protocol, encountered a significant depegging event on October 11, 2023. During which, a sudden rush to redeem the liquid DAI from USDR’s treasury triggered a selling panic. The price of USDR plummeted to a low of $0.5040 per coin, down nearly 50% from the $1.00 peg it targets. Despite the team's commitment to resolving the situation, this incident highlighted a major vulnerability of their stablecoin’s design.
USDR's design relies on users being able to redeem liquid assets (like $DAI) which partially back its value. Real estate holdings make up the rest of the collateral. While this combination does offer a degree of stability, it remains susceptible to abrupt liquidity crises, as evidenced by the depegging. USDR's reliance on maintaining sufficient reserves to meet redemption demands becomes a weakness when these reserves are depleted, leading to major price fluctuations.

Even one of the most liquid and most trusted stablecoins across DeFi, $USDC, fell victim to a bank run in April of this year. The stablecoin depegged as far down as $0.87 (a new all-time-low) during the frenzy.
Many users simply had to hold their rapidly depreciating tokens due to network congestion or being away from their wallets. These vulnerabilities may be “a cost of doing business” to some, but DeFi needs a reliable option that doesn't require accepting the possibility of a bank run.
Open Dollar’s $OD takes advantage of a contrasting design. While always maintaining an over-collateralized ratio of at least 135%, the $OD stablecoin doesn’t rely on liquid reserve redemption to hold its peg. The Open Dollar protocol operates using a dynamic control system, similar to a PID controller. This system continuously adjusts the protocol’s redemption rate to maintain the peg at $1.00, enhancing its resilience to market volatility.
When the market price of $OD deviates from the reference set point of $1.00, the system reacts by modifying the redemption rate up or down depending on the market price. This incentivizes market participants to take actions that restore the peg, ensuring continuous stability.
Open Dollar's mechanism generates arbitrage opportunities when the market price deviates from the redemption price. This incentivizes users to buy or sell $OD, capitalizing on these opportunities for individual profit while aligning the market price with the redemption price at the same time.
Open Dollar's design eliminates dependence on centralized custodians, reducing risks associated with centralized assets. The decentralized nature of the system empowers the community to actively contribute to $OD’s stability without having to worry about the safety of their assets.
Stablecoin depegging events across DeFi emphasize the vulnerability of designs that rely on asset backing & liquid collateral for redemption. Being susceptible to significant price swings when confronted with demand for liquidity is not ideal for long-term confidence. This is precisely why $OD exists: For seamless adjustment to ever-changing market conditions.
We're building the the next generation of DeFi, giving the world access to robust financial tools for lending, productive collateral, and resilient stablecoins. Join our community as we build toward that goal: https://opendollar.com/discord
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