Open DollarA 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...
Open DollarWhy 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...
Open DollarWhat 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.
Open DollarA 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...
Open DollarWhy 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...
Open DollarWhat 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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Investing in web3 can sometimes feel like a sea of opportunity … until the storm hits, leaving many users wishing they had a safe harbor for storing value without sacrificing opportunity.
Those users have spurred the growing popularity of Liquid Staking Tokens (LSTs), which have become the most important yield bearing assets in DeFi by providing predictable long-term rewards, growing into a $20 billion market as of August 2023.
Long term LST holders wish to access the value of their tokens without selling their assets or missing out on yield — to still be able to set sail into the wider world of DeFi, without worrying about if a rogue wave could sink them.
That creates a significant opportunity for an LST-backed stablecoin to capture a greater percentage of the more than $120 billion stablecoin market.
Open Dollar ($OD) is a floating $1.00 pegged stablecoin backed by Liquid Staking Tokens with NFT-controlled vaults.
Open Dollar gives $OD holders access to the value of their tokens without forcing them to sell their assets or miss out on yield, presenting a more flexible and powerful stablecoin that seeks to unify liquidity between tokens and dampen LST volatility.
It is built with the GEB framework — used by RAI and HAI and others — on the rapidly-growing Arbitrum network, allowing it to tap into what has become the largest Layer 2 scaling solution for Ethereum, with $5 billion in Total Value Locked (TVL) as of August 2023.
Investing in web3 can sometimes feel like a sea of opportunity … until the storm hits, leaving many users wishing they had a safe harbor for storing value without sacrificing opportunity.
Those users have spurred the growing popularity of Liquid Staking Tokens (LSTs), which have become the most important yield bearing assets in DeFi by providing predictable long-term rewards, growing into a $20 billion market as of August 2023.
Long term LST holders wish to access the value of their tokens without selling their assets or missing out on yield — to still be able to set sail into the wider world of DeFi, without worrying about if a rogue wave could sink them.
That creates a significant opportunity for an LST-backed stablecoin to capture a greater percentage of the more than $120 billion stablecoin market.
Open Dollar ($OD) is a floating $1.00 pegged stablecoin backed by Liquid Staking Tokens with NFT-controlled vaults.
Open Dollar gives $OD holders access to the value of their tokens without forcing them to sell their assets or miss out on yield, presenting a more flexible and powerful stablecoin that seeks to unify liquidity between tokens and dampen LST volatility.
It is built with the GEB framework — used by RAI and HAI and others — on the rapidly-growing Arbitrum network, allowing it to tap into what has become the largest Layer 2 scaling solution for Ethereum, with $5 billion in Total Value Locked (TVL) as of August 2023.
Users can deposit their staked Ether (stETH or rETH) — and in the future will be able to deposit other trusted collateral, as determined by the $OD DAO — earning 100% of the yield on their LSTs while having the ability to borrow back a significant portion in the form of $OD.
The value of their staked tokens is more easily accessible, making it easier for them to borrow with low interest loans, to create leveraged positions, and to amalgamate liquidity between LSTs, among other potential use cases.
In short, they can earn a significant, safe, return on their deposit, while still having the ability to borrow against it and earn even more.
LSTs and other assets can be locked into Collateralized Debt Positions (CDP) via Non-Fungible Vaults (NFV) on Open Dollar.
This novel model unlocks new markets and use cases by being:
More accessible: The protocol is more capital efficient for users, who can now easily sell their vaults instead of paying fees to be liquidated or pay back their debt.
More manageable: The infrastructure for transferring and owning NFTs as a DAO is already well-established for other use cases.
More composable: It is easier to batch transfer NFTs, and individual users can more easily transfer ownerships of their assets directly from their wallet. This is particularly valuable if a protocol’s front-end fails, as it allows users to trade their vaults easily without having to interact with a protocol’s smart contracts on the back-end.
More visible: Wallet aggregators and portfolio trackers will be able to easily display user’s NFVs along with their assets directly, instead of trying to calculate their position.
“As the first CDP protocol with NFVs, novel use cases can be built on Open Dollar,” says Joseph Shiarizzi, co-founder and CEO of Open Dollar. “Vaults can be sold through existing NFT marketplaces, automations can sell user vaults to arbitrageurs without having to pay liquidation penalties, and existing NFT infrastructure can be used in new ways.”
Without sufficient collateralization, an LST-backed stablecoin risks losing its stability if the value of the derivatives depeg from the original staked tokens. That’s why Open Dollar is over-collateralized, with every $1 stablecoin backed by 135% in crypto assets.
Governance structure also matters. Broad, decentralized governance has its place in some web3 protocols. But a certain amount of governance minimization — in which a protocol intentionally reduces reliance on human voting mechanisms where possible — is valuable in DeFi use cases, as users won’t store their valuable assets unless they can depend on the networking acting in consistent and predictable ways.
“Governance minimization is important because it supports the primary value proposition of protocols: credible neutrality.” as Fred Ehrsam, a co-founder of Coinbase and the crypto investment firm Paradigm, wrote in 2020.
While there are some core protocol functions that may require a level of governance from human users, governance minimization seeks to create a balance — prioritizing the predictability of minimized governance over core protocol functions so that liquidity providers can have faith that a set of human actors cannot seize outsize control over the protocol.
“Governance minimized protocols will see the most use. It is the core attribute which kicks off the positive feedback loop between trust and adoption as a standard. It also puts powerful, basic tools in the hands of all creators, generating more opportunity and faster progress for the entire crypto ecosystem.” — Fred Ehrsam, Coinbase and Paradigm co-founder
Governance minimization is also a core principle of Open Dollar's design, serving as a safeguard against any long-term centralization of protocol control.
New collateral types can only be added by a DAO governed by Open Dollar Governance ($ODG) token holders. However, the DAO’s power is extremely limited as it can not set new stability rates for existing vaults, mint new $OD tokens, change the distribution of fees, or update many of the preset or market determined parameters of the protocol.
This approach aims to establish robust security guarantees for platform users and prevent undue influence over the system's operation.
Read more about Non-Fungible Vaults. Check out the Open Dollar App and get in touch with us on Discord.
Users can deposit their staked Ether (stETH or rETH) — and in the future will be able to deposit other trusted collateral, as determined by the $OD DAO — earning 100% of the yield on their LSTs while having the ability to borrow back a significant portion in the form of $OD.
The value of their staked tokens is more easily accessible, making it easier for them to borrow with low interest loans, to create leveraged positions, and to amalgamate liquidity between LSTs, among other potential use cases.
In short, they can earn a significant, safe, return on their deposit, while still having the ability to borrow against it and earn even more.
LSTs and other assets can be locked into Collateralized Debt Positions (CDP) via Non-Fungible Vaults (NFV) on Open Dollar.
This novel model unlocks new markets and use cases by being:
More accessible: The protocol is more capital efficient for users, who can now easily sell their vaults instead of paying fees to be liquidated or pay back their debt.
More manageable: The infrastructure for transferring and owning NFTs as a DAO is already well-established for other use cases.
More composable: It is easier to batch transfer NFTs, and individual users can more easily transfer ownerships of their assets directly from their wallet. This is particularly valuable if a protocol’s front-end fails, as it allows users to trade their vaults easily without having to interact with a protocol’s smart contracts on the back-end.
More visible: Wallet aggregators and portfolio trackers will be able to easily display user’s NFVs along with their assets directly, instead of trying to calculate their position.
“As the first CDP protocol with NFVs, novel use cases can be built on Open Dollar,” says Joseph Shiarizzi, co-founder and CEO of Open Dollar. “Vaults can be sold through existing NFT marketplaces, automations can sell user vaults to arbitrageurs without having to pay liquidation penalties, and existing NFT infrastructure can be used in new ways.”
Without sufficient collateralization, an LST-backed stablecoin risks losing its stability if the value of the derivatives depeg from the original staked tokens. That’s why Open Dollar is over-collateralized, with every $1 stablecoin backed by 135% in crypto assets.
Governance structure also matters. Broad, decentralized governance has its place in some web3 protocols. But a certain amount of governance minimization — in which a protocol intentionally reduces reliance on human voting mechanisms where possible — is valuable in DeFi use cases, as users won’t store their valuable assets unless they can depend on the networking acting in consistent and predictable ways.
“Governance minimization is important because it supports the primary value proposition of protocols: credible neutrality.” as Fred Ehrsam, a co-founder of Coinbase and the crypto investment firm Paradigm, wrote in 2020.
While there are some core protocol functions that may require a level of governance from human users, governance minimization seeks to create a balance — prioritizing the predictability of minimized governance over core protocol functions so that liquidity providers can have faith that a set of human actors cannot seize outsize control over the protocol.
“Governance minimized protocols will see the most use. It is the core attribute which kicks off the positive feedback loop between trust and adoption as a standard. It also puts powerful, basic tools in the hands of all creators, generating more opportunity and faster progress for the entire crypto ecosystem.” — Fred Ehrsam, Coinbase and Paradigm co-founder
Governance minimization is also a core principle of Open Dollar's design, serving as a safeguard against any long-term centralization of protocol control.
New collateral types can only be added by a DAO governed by Open Dollar Governance ($ODG) token holders. However, the DAO’s power is extremely limited as it can not set new stability rates for existing vaults, mint new $OD tokens, change the distribution of fees, or update many of the preset or market determined parameters of the protocol.
This approach aims to establish robust security guarantees for platform users and prevent undue influence over the system's operation.
Read more about Non-Fungible Vaults. Check out the Open Dollar App and get in touch with us on Discord.
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