Market Depth and Liquidity

Accepted stablecoins must exhibit high liquidity to enable efficient redemption and minting processes. Potential reserve assets with low liquidity and depth indirectly signal market confidence, yield opportunity and asset maturity issues that will need to be resolved before being considered as a suitable and healthy reserve asset for OUSD.

  • Liquidity Ratios:

    • Define a reserves volume ratio as the average daily trading volume of each reserve asset divided by the total outstanding of each asset used as reserves in the OUSD system.

    • Set a minimum threshold for each ratio and metric (e.g., reserves daily volume must be at least 50% of the total OUSD in circulation).

  • Order Book Depth Requirement:

    • Establish minimum requirements for order book depth to ensure large orders can be accommodated without significant slippage.

    • Calculate the average order book depth at various price levels (e.g., within 1% of the current price) and set a benchmark.

  • AMM Liquidity Depth:

    • Establish minimum requirements for amount of AMM pool liquidity to ensure large orders can be accommodated without significant slippage.

    • Measure amount of slippage occurring during various size reserves liquidations to restore OUSD peg (25,50,100% reserves reserve liquidation slippage).

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