Staking AMO
The OUSD/sOUSD framework is designed to address different risk and reward preferences within a single ecosystem. It does so by splitting the economic function of stablecoin ownership into two tokens:
OUSD, a senior asset designed for price stability.
sOUSD, a staked asset taking on higher risk in exchange for a share of the system’s yield.
This division helps maintain a robust structure where stability-oriented users can hold OUSD, while those seeking higher returns (and willing to absorb greater risk) can stake their OUSD into sOUSD.
OUSD (Senior Asset)
OUSD is intended to maintain a steady price, making it suitable as:
A unit of account
A low-volatility store of value
A reliable medium of exchange
By closely mirroring a base token’s value, OUSD is positioned as the stable component within the ecosystem.
Benefits for Holders
Stability
OUSD holders have reduced exposure to market volatility.
Utility
Thanks to its predictable price, OUSD is ideal for integration into DeFi platforms. It can serve as:
Collateral in lending protocols
Liquidity in decentralized exchanges
A stablecoin-like building block for various financial use cases
Optional Incentives
Protocols leveraging OUSD may offer governance rights, fee reductions, or other benefits to encourage adoption and enhance liquidity.
sOUSD (Staked Risk/Reward Asset)
Purpose
sOUSD represents a staked version of OUSD. By staking, token holders accept additional risk in return for a proportional share of the system’s generated yields. Essentially, sOUSD holders act as the economic backstop, protecting the stability of OUSD.
Risk/Reward Dynamics
Yield Sharing
Surplus returns from protocol strategies—such as staking, lending, or fee collection—are partially distributed to sOUSD holders.
Over time, sOUSD may accrue growing claims on these yields, increasing its relative value compared to OUSD.
Loss Absorption
Should strategies underperform or incur losses, sOUSD bears the brunt of the impact.
By absorbing losses first, sOUSD protects OUSD holders from volatility and helps sustain OUSD’s stable price peg.
Comparing OUSD and sOUSD
OUSD:
Focus: Stability
Risk Exposure: Low
Yield: None or minimal
Role: Serves as a stable asset and a foundation for DeFi integrations
sOUSD:
Focus: Yield Generation
Risk Exposure: Higher
Reward: Receives a share of surplus returns
Role: Acts as a buffer for losses, safeguarding OUSD stability
sOUSD Creation:
When users stake their OUSD, they receive sOUSD in return. The rate at which OUSD is converted into sOUSD is initially set at 1:1. As yield accrues in the backing reserves allocated to the staking vault, the value of sOUSD relative to OUSD increases.
Yield Accrual:
Yield from the invested backing reserves increases the value of the total staked pool. This is reflected in the sOUSD to OUSD exchange rate, which adjusts upward as more yield is generated. Essentially, the longer or the more OUSD one stakes, the greater their proportionate share of the accrued yield.
Exchange Rate Adjustment:
The key to understanding the yield mechanism lies in how the sOUSD/OUSD exchange rate is adjusted. The rate adjustment is based on the total yield accrued to the staking vault, divided by the current supply of sOUSD. This method ensures that the yield distribution is proportional to each staker's contribution.
By separating stability (OUSD) from staking risk (sOUSD), the system aligns incentives and provides flexibility for different user preferences. OUSD appeals to risk-averse participants seeking a dependable store of value, while sOUSD caters to yield-seeking users willing to accept potential losses in exchange for higher returns.
This two-tier model makes the overall protocol more resilient: those who prioritize safety and predictable value can rely on OUSD, while those chasing growth can opt into sOUSD. The net effect is a balanced, incentive-driven framework that keeps OUSD stable under a variety of market conditions.
Last updated