It has been an incredible month in the Solana DeFi Community with Serum DEX crossing $1 Billion dollars in transaction volume since inception and and beautiful Automated Market Makers (AMM’s) being released such as Raydium and Orca. Market liquidity providers help provide permission less and automatic liquidity pools rather than traditional markets of buyers and sellers. But, where is the borrowing and lending?
Introducing Oxygen, a DeFi protocol that is lets you create and deposit your assets into the pool, so that people who want to borrow the asset can do so, on your own lending terms. This lets you generate a passive income by lending out your assets! It is 100% decentralised, 100% non-custodial and 100% on-chain. You can also use your assets as collateral so that you can borrow, with the Oxygen protocol matching you the borrower with a lender.
Key Difference from other DeFi Protocols
Like most DeFi protocols in this space, this project is open source so contributors can make it better. It is decentralised, non-custodial and fully on the Solana blockchain. Here are are the key differentiators from the Oxygen Protocol Documentation:
- No Centralised Operator – It’s 100% decentralised, 100% non-custodial, 100% on-chain. All transactions are purely peer-to-peer with no involvement from a centralised operator. Oxygen protocol never has access to your private keys at any point. All the transactions are auditable, immutable and final. Clearing price for borrowing / lending is determined by the market – through on-chain order-book matching.
- Multiple use of the same collateral. Oxygen enables you to generate yield on your portfolio through lending out your assets and borrowing other assets at the same time.
- Cross-collateralisation. With Oxygen, you can utilise all of your portfolio as collateral, when you want to borrow other assets. This should mean lower margin call/liquidation risk for your portfolio.
- Market-based pricing. Oxygen protocol is order-book based, rather than following a pre-set market model that needs to be manually adjusted. This means you get the best/fair price for borrowing/lending every time.
- Prime Brokerage is a core building block of financial markets trading business in the “real-world” investment banking. It connects various market participants – hedge funds, institutions, pension funds, insurance companies, asset managers and liquidity providers – for a more efficient market and price discovery, as well as facilitating leveraged trading. We intend to help achieve the same and beyond with Oxygen protocol in the world of digital assets.
- Pools – You can create Pools of assets that you may use as collateral for borrowing assets from others or to lend to others. The most important benefit of the Prime Brokerage protocol is that you can lend out assets earning a yield as a lender AND use those same assets as collateral for borrowing assets from other Pools. The protocol ensures that any assets that are lent, are done so against the appropriate level of collateral.
- Decentralised matching engine – thanks to the Serum ecosystem, Oxygen’s matching of borrowing and lending orders is 100% decentralised and on-chain: This will give traders full control over their orders, unlike automated market making; Orderbook and matching is fully automated on-chain and orders are from Serum end users.
- Close-out management – Initially, liquidation will be done by third-party liquidators (you can be one too). Beta version will contain Serum DEX based liquidation – relying on decentralised exchange liquidity if available.
- Liquidity – Oxygen.org is 100% market based. Availability of borrowing/lending and pricing depends on the market at the time of the requested transaction. The biggest players in the digital asset space and high frequency trading Alameda Research and Jump Trading are committed to developing Serum-based financial infrastructure. Liquidity on Oxygen.org can unlock leveraged trading, derivatives market-making, enhance activities of proprietary and OTC trading desks.
CeFi versus DeFi using Oxygen Protocol
What is the cost of the Oxygen Protocol service?
The Oxygen Protocol charges 15% success fee from the yield earned by the lender of the asset, and 15% from the market clearing rate for borrowing the asset. For example, if the market-clearing rate is 5% per annum, the lender will get 4.25% per annum yield, the borrower will pay 5.75% per annum interest. 1.5% per annum would go to the Oxygen protocol and towards buy and burn of Oxygen tokens. Ownership of Oxygen tokens reduces the protocol fees.
Ongoing Security & Risk Management
Oxygen Protocol are looking to continually manage security and risk by focusing Smart contract risk (risk of a bug within the protocol code) and liquidation risk (risk of the collateral liquidation process). The will upkeep their security via the following means:
- Oxygen protocol has been reviewed by Alameda Research/Solana teams, leaders in high frequency trading, creators of FTX exchange and Serum decentralised ecosystem to ensure it’s fit to accommodate high frequency and dollar value of assets trading.
- They are engaging Trail of Bits and/or other leaders in cybersecurity to provide software assurance to ensure maximum safety.
- They are working with a top-4 audit firm in the world, to review the Oxygen protocol and provide IT Assurance.
- They are looking to run large bounty competitions to reward people to make the Oxygen protocol more secure.
Oxygen.org Protocol Using $OXY
OXY token holders will enjoy 100% of the protocol fees through buy and burn. The token holders will also enjoy reduced cost of using the protocol and will be the ones driving governance decisions.
Follow Oxygen Protocol
- Contact: firstname.lastname@example.org
- Address: Baarerstrasse 75, 6300 Zug, Switzerland
- Twitter: @Oxygen_protocol
- Website: https://www.oxygen.org/