DeFi Project Spotlight: Orion Money, the Cross-Chain Stablecoin Bank

Orion Cash is aiming to develop into a cross-chain stablecoin financial institution based mostly on an modern suite of DeFi merchandise offering seamless and frictionless entry to stablecoin saving, lending, and spending. Its flagship product is Orion Saver, which permits customers to entry Anchor’s engaging and secure yield on stablecoin deposits throughout a number of blockchains.

Orion Cash Defined

Orion Cash is a set of cross-chain DeFi merchandise offering customers with seamless entry to a number of the highest yield charges on stablecoin deposits in the marketplace.

With the intention to perceive how Orion works, we have to look into Anchor Protocol on Terra. Anchor is a decentralized cash market and financial savings protocol providing a hard and fast 20% yield on UST deposits. It generates a excessive secure yield on UST deposits by lending out deposits to debtors who’ve secured collateral in yield-bearing belongings.

These belongings, which Anchor calls “liquid-staked belongings” or “bonded belongings” (bAssets), characterize native staked tokens of Proof-of-Stake-based chains. For instance, as a substitute of requiring collateral in Ethereum, Anchor asks debtors to safe collateral in staked Ethereum on Lido (bEth), which at present yields round 5% APR.

Anchor successfully reallocates the on-chain yield earned from the borrower’s overcollateralized bAssets to depositors. The minimal collateral ratio is about to 2:1, so a consumer borrowing $1,000 in UST would want to safe $2,000 collateral in bEth or bLuna, which might generate $100 or 10% yield for the lender from a 5% APR. The remaining 10% is roofed by the curiosity debtors pay on the loans. The speed the debtors pay fluctuates relying on market circumstances.

Anchor’s course of for providing a secure 20% rate of interest is easy. When it earns greater than 20% or the actual yield is greater than the Anchor fee, the protocol allocates the surplus yield in a UST denominated “yield reserve,” whereas when the actual yield is decrease than the Anchor fee, the protocol attracts down from the reserve to make up for the yield shortfall.

Nonetheless, Anchor’s engaging and low risky lending yields are unique to UST depositors on the Terra community, which is the place Orion comes into play. Orion leverages Anchor to convey the identical excessive stablecoin yield to Ethereum, Polygon, and Binance Sensible Chain, amongst others, and to depositors of various stablecoins, together with DAI, USDT, USDC, FRAX, and BUSD. Explaining why the challenge selected to construct Orion, co-founder Vol Pigrukh says that it needed to assist a wider consumer base leverage Anchor. “We needed to democratize the protocol and convey it to all large chains and supply entry to Anchor’s excessive secure rate of interest to any stablecoin holders on their native blockchains,” he explains. 

With Orion, customers don’t have to bridge their stablecoins to Terra. As a substitute, they’ll deposit to Orion Saver from Ethereum or one other supported chain to start out incomes a hard and fast yield on their stablecoins. 

Vol and Kos Chernysh are the co-founders of Orion. They beforehand based the eCommerce analytics startup Profitero earlier than promoting the corporate in April 2020. The pair enrolled in Terra’s first hackathon with three former Profitero staff and developed Orion’s first minimal viable product after two days of coding. They received first place. 

Orion Saver Underneath the Hood 

Orion’s present rates of interest on stablecoin deposits are decrease than the 20% goal. For instance, Orion is paying 16.5% APY on UST, and 13.5% on different supported stablecoins. It is because Orion Saver is at present in beta, and the crew is experimenting with totally different charges to check how the system performs. Pigrukh explains: 

“When a consumer deposits USDT, we swap this USDT into wrapped UST, bridge it to Terra protocol, and deposit into Anchor for the Anchor fee. This course of consists of bridge charges, swap charges, and so forth, which the protocol is masking. So we need to be sure that the system works successfully with out getting an excessive amount of into the destructive margin on the revenues earlier than we convey the charges greater.”

Orion’s final purpose is to convey the rates of interest throughout all stablecoins as much as the Anchor fee of 20%. Actually, the crew says that Orion plans to degree and lift the charges throughout each supported stablecoin to fifteen% by the tip of the month.

Within the background, Orion makes use of EthAnchor—a set of good contracts developed by Orion in collaboration with Anchor—to deposit Ethereum-based stablecoins into Anchor on Terra. The method of bridging stablecoins to Terra and depositing them in Anchor includes a number of good contract interactions. With the inner stablecoin swimming pools, customers solely have to pay for one good contract transaction, so they’re much less uncovered to Ethereum’s excessive gasoline charges. 

Governance and Tokenomics

Orion Cash is at present within the technique of launching its native token, ORION, by way of an preliminary decentralized providing (IDO) on Polkastarter and DaoMaker, with over 100,000 customers on the waitlist. The ORION token can be minted on Ethereum, and a portion of the provision can be bridged to Terra, Polygon, Binance Sensible Chain, and different networks as required to allow the protocol to perform extra effectively throughout a number of ecosystems. 

The purpose of the ORION token is to unlock governance for the protocol and set up a income share mechanism for Orion Cash’s customers. Discussing the worth proposition of the ORION token, Pigrukh says:

“There are two massive causes to carry and stake ORION tokens. The primary is to spice up the yields on stablecoin deposits, which is able to rely upon the variety of tokens staked, and the second is to get a share of the protocol’s income share by way of staking. We need to develop a variety of income streams that may all converge on the ORION token as the worth seize mechanism for the protocol.”

Orion plans to leverage a wide range of income streams and dedicate them in direction of staking rewards. For instance, Orion at present operates the biggest Proof-of-Stake validator on the Terra community and plans to allocate 100% of the validator’s earnings in direction of the Orion “staking fund” to be distributed to ORION stakers as soon as the token is reside. Moreover, Orion Cash will siphon the earnings from future Orion Cash merchandise in direction of the staking fund, which brings us to our subsequent level.

Orion Cash’s Future Product Providing

In addition to the Orion Saver product, which is already reside on Ethereum, the Orion crew additionally plans on launching a number of different merchandise, together with Orion Yield and Insurance coverage, Orion Pay, tokenized derivatives, self-paying and no-liquidation loans, and protocol-specific optimizers.

First on the roadmap is the Yield and Insurance coverage product, which is able to supply present high-yield financial savings to customers and use the liquidity to put money into diversified methods. Explaining the product, Pigrukh says: 

“The Orion Yield and Insurance coverage product will come from the collaboration with different cash markets on Terra reminiscent of Mars Protocol. It’ll present assured greater financial savings charges to Orion Saver depositors by implementing asset-neutral investing methods through Mars Protocol with greater however variable yield of say 30%. Then we’ll work with stakers to underwrite the insurance coverage for the curiosity to make it secure in trade for the income share.”

For Orion Pay, the crew is planning to develop fiat on-off ramps, crypto-to-fiat direct funds, and launch a crypto debit card to permit customers to pay for “real-world” items with high-yield-earning stablecoins. Orion Pay is due in Q2 or Q3 of subsequent yr, whereas no launch dates have been set for the remaining merchandise. 

Competitors and Potential Dangers

In the case of competitors, Orion sees itself in a category of its personal. For now, the crew says it isn’t involved about different tasks providing related merchandise. The challenge’s development philosophy is to extend the scale of the crypto financial savings market slightly than combating to seize a bigger share of the present one. Commenting on the challenge’s plans to draw new customers, Pigrukh says: 

“Orion Cash brings a greater and far greater degree worth proposition than any financial savings product in the marketplace. We’re already experiencing some circulation of customers from centralized lending protocols like Celsius, Nexo, and BlockFi, and in addition from decentralized ones like Aave and Compound. As soon as the Orion Pay product comes out, we need to actually go mass market and convey new customers into crypto.”

Orion additionally says it’s thought of the potential dangers. The crew has addressed the everyday good contract safety considerations related to DeFi protocols by hiring three respected safety companies to conduct audits. Nonetheless, safe good contracts wouldn’t shield the ecosystem from regulatory assaults. Orion makes use of stablecoins, which have lately develop into a degree of focus for regulators within the U.S. and world wide. In July, the Treasury Secretary Janet Yellen urged regulators to “act rapidly” to cope with stablecoins. Earlier this month, Treasury officers expressed considerations in regards to the fast development of pegged belongings and their potential to trigger monetary instability. Nonetheless, Pigrukh says that the crew is “not anxious” in regards to the heightened consideration from regulators. He provides: 

“We’re monitoring the [regulatory] developments very intently. I do suppose that UST has a giant benefit by being a decentralized and algorithmic stablecoin. As for Orion Cash, we’re planning to implement a DAO so as to really decentralize. That is the one strategy to function in crypto, and I feel the elevated scrutiny from regulators will solely make crypto extra decentralized, which might be an excellent factor.”

In conclusion, Orion Cash is an bold challenge developed by an skilled crew with a confirmed product-market match. The crew’s largest challenges are constructing the on-chain infrastructure required to convey Anchor’s yield charges throughout as many blockchains and stablecoins as attainable, in addition to the on and off-ramp infrastructure to assist usher in mass crypto adoption. 

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