[Temperature Check] Integrate Origin’s OETH to kETH and Restaking Cloud
Resources
Website: https://originprotocol.com/ and https://oeth.com/
Documentation: https://docs.oeth.com/
Github Page: Origin Protocol · GitHub
Twitter: https://twitter.com/OriginProtocol
Discord: Origin Protocol (OGN, OGV, OUSD, OETH)
Analytics: Analytics | Overview
Audits: Audits - Origin DeFi Docs
OETH Contract: 0x856c4Efb76C1D1AE02e20CEB03A2A6a08b0b8dC3
Logo: OETH Token Logo
Summary
This is a proposal for a new LST, Origin Ether (OETH), to be added alongside the existing options from Lido and Rocketpool. This proposal seeks to:
- include OETH as a new yield source within kETH
- Integrate OETH as a restaking asset on Restaking Cloud
OETH Overview
Origin Ether was launched in May 2023 and is an ERC20 LST aggregator that generates yield while sitting in your wallet by tapping into blue-chip protocols. OETH is backed 1:1 by ETH, WETH, stETH, rETH, and frxETH at all times; holders can go in and out of OETH as they please. Similar to stETH, OETH yield is paid out daily and automatically (sometimes multiple times per day) through a positive rebase in the form of additional OETH, proportional to the amount of OETH held.
OETH yield comes from a combination of:
- Deploying collateral across Curve, Convex, Morpho, Balancer, and Aura
- LST validator rewards
- A 50bip exit fee is charged to those who choose to exit OETH via the dapp (completely avoidable if using a DEX), this fee goes back to OETH holders
- OETH sitting in non-upgradable contracts does not rebase, instead the interest generated from those tokens is provided to those that can rebase
These 4 yield generating functions combined enable OETH to generate higher yields than holding any single LST or farming ETH manually. The current collateral allocation and yield strategies can be seen on-chain at all times via the OETH analytics page. Future OETH collateral and yield strategies are governed by OGV stakers. More information on OETH and its mechanics can be found in the OETH docs.
There is deep on-chain liquidity, therefore obtaining OETH is seamless. Users can convert into OETH via any of the following methods:
- Minting on OETH.com
- Swapping on Curve ($32.38m)
- Swapping on Uniswap ($233.8k)
- Swapping on Maverick ($114.58k)
There are no lockups with OETH, users can move in and out of OETH at all times. OETH remains completely liquid at all times, and can be spent in the same way as its backing collateral, if unexpected expenses were to arise.
Performance & Growth
The OETH TVL, now over $91m (39,633 ETH), has been trending upwards and has been well received by users with the yield OETH is generating. OETH yield is currently at 5.93% APY, whereas native staking yield on ethereum has ranged from 3.03% - 4.03% APY over the last few months. Origin has managed to integrate OETH to a range of verticals across Defi, including vaults, restaking, and money markets :
Eigenlayer - Eigenlayer
Pendle - Pendle
Harvest - Harvest App
Beefy - Beefy
Yearn - Yearn Vaults
Teahouse - Teahouse ETH Vault
Timeswap - Timeswap
Interest Protocol - Interest Protocol
Tai - Money God
Myso - Myso
Metastreet - MetaStreet
Davos - Davos Protocol
Marketing Support
Origin’s marketing team will gladly provide support for co-marketing, should Blockswap onboard OETH. Co-marketing can include long form Tweets and threads on Origin’s Twitter, live Twitter Spaces, features in Origin’s monthly investor email, announcements to Origin’s Discord audience, and an addition to Origin’s ecosystem page. A Telegram group between the Origin and Blockswap marketing teams can also be set up to discuss additional co-marketing ideas and efforts.
Potential Risks and Mitigation
The introduction of OETH provides an opportunity for diversification and broadening the collateral base while mitigating concentration risks. However, Origin does acknowledge the concerns around the potential risks associated with OETH too. There are six possible risks when using OETH, and Origin is making sure to reduce each risk as much as possible:
New token risk - Given OETH is a relatively new token, some may be worried that OETH is prone to new attack surfaces. While this may be true for other new tokens, OETH was built reusing 95% of the OUSD code, of which 10+ audits have been done since 2020. Not that long ago, OUSD reached a market cap of $300m without breaking, and without diminishing the APY it was capable of generating. Origin continues to work on OUSD, despite the lower market cap.
Counterparty risk - OETH is governed by OGV stakeholders around the world. Everything from yield generation to fee collection and distribution is managed by a set of smart contracts on the Ethereum blockchain. These contracts are upgradeable with a timelock and are controlled by hundreds of governance token holders. While the initial contracts and yield-earning strategies were developed by the Origin team, anyone can shape the future of OETH by creating or voting on proposals, submitting new strategies, or contributing code improvements. We intend for all important decisions to be made through community governance and limited powers to be delegated to trusted contributors who are more actively involved in the day-to-day management of the protocol.
Smart contract risk of the yield strategies - Origin is only using platforms for yield generation that have a proven track record, have been audited, have billions in TVL, maintain a bug bounty program, and provide over-collateralized loans. Over-collateralization in itself, combined with liquidations, provides a reasonable level of security for lenders.
Collateral risk - Origin has chosen 3 of the largest LSTs to ever exist to back OETH, and they have maintained their peg quite well since launch. They have also demonstrated significant growth in circulating supply, so the Origin team is confident that the 3 LSTs will maintain their peg and that OETH will remain stable to ETH. To ensure accurate pricing at all times, OETH is using Chainlink oracles for pricing data for rETH and stETH, and a dual oracle for frxETH that combines two sources: the Curve frxETH/ETH EMA oracle and the Uniswap frxETH/FRAX TWAP oracle. In situations where any OETH collateral falls below peg, OIP-4 disables minting of additional OETH tokens using the de-pegged asset.
Slashing risk - Since OETH is collateralized by multiple LSTs at the same time, OETH is protected from slashing from any individual collateral LST. If there is a small slash, the OETH yield will simply decrease, as income will likely exceed the size of the slash. During a major slashing event, both the slashed LST and OETH will experience a drop in value relative to ETH, but OETH should not fall as low and for as long as the slashed LST, as the remaining un-slashed OETH collateral LSTs will soften the blow. There will never be a negative OETH rebase.
Smart contract risk of OETH - Origin is taking every step possible to be proactive and lessen the chance of losing funds. Security reviews are prioritized over new feature development, with regular audits being done, and multiple engineers are required to review each code change with a detailed checklist. There are timelocks before protocol upgrades are launched, and deep dives into the exploits of other protocols are constantly being done to make sure the same exploits don’t exist on Origin contracts. Security is extremely important to the Origin team. OETH was built reusing 95% of the OUSD code, of which 10+ audits have been done since 2020. All audits can be seen on Audits - OUSD , and OpenZeppelin is now on retainer. On-chain insurance protocol InsurAce awarded OETH and OUSD the highest possible security rating of AAA, of which only 2 other projects on the InsurAce platform have received. Optional OETH cover is currently available for both OETH and OUSD on InsurAce. Origin Defi also maintains a $1m bug bounty through Immunefi, with a resolution time of 5 hours.
Pete is a core member of Origin Protocol and is joined by the fully doxxed Origin team and community, which includes hundreds of thousands of members and open-source contributors. Many members of the Origin team, including both founders, are holding a significant portion of their personal wealth in OETH. Origin Protocol’s corporate treasury is also holding millions of dollars in OETH. We have skin in the game and are willing to put our own money at risk with the code we have written.
External OETH analysis:
Llama Risk - Asset Risk Assessment: Origin Ether (OETH)
Auxo - OETH - Protocol Analysis
OETH in the news:
Coindesk - Origin Protocol Enters Competitive Ether Yield Market With OETH Offering
TokenInsight - Origin Protocol Launches Yield Aggregating $ETH Derivative Called $OETH
Blockster - Maximize ETH Staking Yields with OETH: A Yield-Bearing, Ether-Pegged Token by Origin Protocol
We would be happy to answer any questions on Origin Protocol, OETH, or the proposal itself. The Origin team can also be reached at any time via the Origin Discord server.