OTOKEN and sOTOKEN

The framework introduces two primary tokens that represent different roles and risk profiles within the system:

OTOKEN (Senior Asset)

Purpose:

OTOKEN is designed to be a stable, senior-level asset, closely linked to a base token’s value. It aims to maintain a consistent price, making it suitable as a unit of account, a low-volatility store of value, or a reliable medium of exchange within the ecosystem.

Benefits for Holders

Stability: OTOKEN holders enjoy reduced exposure to market volatility.
Utility: OTOKEN’s predictable value makes it a desirable asset for DeFi integrations—such as collateral in lending platforms, liquidity pairs in decentralized exchanges, and other stablecoin-like use cases.
Optional Incentives: Protocols may offer additional perks—like governance voting power, fee rebates, or other incentives—to encourage OTOKEN adoption and utilization.

sOTOKEN (Staked Risk/Reward Asset)

Purpose

sOTOKEN is a staked version of OTOKEN that takes on more risk in exchange for a share of the system’s generated yield. Rather than enjoying price stability, sOTOKEN holders serve as the economic backstop for the system.

Risk/Reward Dynamics

Yield Sharing: When the system’s AMOs generate surplus returns (via staking, lending, trading fees, or other strategies), sOTOKEN holders receive a portion of these profits. Over time, their sOTOKEN balance may represent a growing claim on the system’s accumulated yields.
Loss Absorption: In the event of strategy underperformance or unexpected losses, sOTOKEN is the first line of defense. Losses reduce the sOTOKEN pool rather than OTOKEN holders’ value, protecting OTOKEN stability.

In essence, you can think of OTOKEN and sOTOKEN as two ends of a spectrum:

OTOKEN: Stability-focused, lower risk, no yield.
sOTOKEN: Yield-focused, higher risk, serving as the buffer that keeps OTOKEN stable.

This two-tiered structure aligns incentives and ensures that those who seek stability can have it, while those willing to shoulder more risk are compensated with higher potential returns.

PreviousCore Concepts NextAlgorithmic Market Operations (AMOs)

Last updated 3 months ago

OTOKEN (Senior Asset)

Purpose:

Benefits for Holders

Stability: OTOKEN holders enjoy reduced exposure to market volatility.

Utility: OTOKEN’s predictable value makes it a desirable asset for DeFi integrations—such as collateral in lending platforms, liquidity pairs in decentralized exchanges, and other stablecoin-like use cases.

Optional Incentives: Protocols may offer additional perks—like governance voting power, fee rebates, or other incentives—to encourage OTOKEN adoption and utilization.

sOTOKEN (Staked Risk/Reward Asset)

Purpose

Risk/Reward Dynamics

Yield Sharing: When the system’s AMOs generate surplus returns (via staking, lending, trading fees, or other strategies), sOTOKEN holders receive a portion of these profits. Over time, their sOTOKEN balance may represent a growing claim on the system’s accumulated yields.

Loss Absorption: In the event of strategy underperformance or unexpected losses, sOTOKEN is the first line of defense. Losses reduce the sOTOKEN pool rather than OTOKEN holders’ value, protecting OTOKEN stability.

In essence, you can think of OTOKEN and sOTOKEN as two ends of a spectrum:

OTOKEN: Stability-focused, lower risk, no yield.

sOTOKEN: Yield-focused, higher risk, serving as the buffer that keeps OTOKEN stable.

This two-tiered structure aligns incentives and ensures that those who seek stability can have it, while those willing to shoulder more risk are compensated with higher potential returns.