Litepaper Bringing non-fungible tokens and decentralized finance to the masses
Origin’s mission is to bring non-fungible tokens (NFTs) and decentralized finance (DeFi) to the masses.
After three years of building consumer-friendly products in the blockchain space, we’ve learned many valuable lessons.
The first significant wave of users of decentralized commerce applications will be those seeking experiences or products they cannot get from centralized alternatives. Many of these early users will be crypto natives. The most prominent product category to emerge is the Non-Fungible Tokens (NFTs) vertical. NFTs do not merely represent digital collectibles but can create entirely new experiences for creators and communities.
NFTs can function as digital collectibles. Further, they can be tokenized representations of physical goods and collectibles, unlock other digital content, and act as access tokens to digital or in-person experiences. NFTs can be used for a wide array of financial applications and use cases. The design space for NFTs is nearly unlimited and represents an exciting paradigm shift for blockchain technology.
Decentralized Finance (DeFi) is the gateway to unlocking massive new financial opportunities for lenders, creditors, and liquidity providers. Over $40B of value is locked in DeFi protocols, and this number is expected to grow by multiple orders of magnitude in the next few years. However, we are still in the very early innings of the DeFi movement.
Today most DeFi participants are highly sophisticated and number in the tens of thousands of users, while the majority of cryptocurrency users numbering in the millions have not yet adopted these technologies en masse. Interacting with DeFi protocols is difficult and cumbersome, requiring complicated operations like staking/unstaking, measuring impermanent loss, and paying expensive gas fees. Further, hundreds of millions to billions of mainstream consumers, merchants, retail investors, small businesses, and global enterprises have very little knowledge of these permissionless financial protocols and are unable to participate in perhaps the most disruptive movement in finance since the very invention of money itself.
While there are both buyers and sellers that transact across various verticals with stablecoins and/or Bitcoin and Ether, existing widespread payment methods like credit cards and mobile payments are still preferred by many crypto-savvy users for their ubiquity, convenience, and lack of pricing volatility. Peer-to-peer commerce is handicapped until cryptocurrencies become the dominant form of medium of exchange.
Simply creating a commerce platform using decentralized technologies does not guarantee widespread merchant and consumer adoption. Only by creating new killer applications that are not possible without crypto-centric technologies will our industry succeed in creating a more open, permissionless, and resilient future for global commerce and finance that impacts hundreds of millions or billions of lives.
The Origin Token (OGN) is the governance and value accrual token for the entire Origin Platform and suite of products. OGN token holders will be able to create and vote on proposals to govern the underlying protocol. OGN holders also directly benefit from the success of the Origin Platform and products built on top of it. Revenues generated accrue directly to OGN via several economic models which can be changed in the future through the governance process.
We believe the convergence of peer-to-peer commerce, especially in the NFT vertical, and decentralized finance (DeFi) will unlock billions of dollars in value that we intend to capture as part of the Origin Platform and ecosystem.
To get there, we will bring blockchain-enabled commerce and finance to the masses. We will continue to upgrade the Origin Commerce platform to enable new killer use cases that are only made possible by cryptocurrency technologies. To start, we will take advantage of non-fungible tokens (NFTs) to build new commerce experiences that cannot be replicated on incumbent platforms like Shopify, Amazon, or Alibaba.
In 2020 alone, over $250M in NFTs changed hands, with most of that occurring late in the year. The rate of growth in NFT sales and trade volume and the rate of innovation in the space is exponential. Top brands like the NBA and MLB have already gotten involved and everyone from Andreessen Horowitz from the New York Times is investing in or commenting on NFTs. NFTs have the potential to disrupt the music industry ($70B+ a year), fine art sales ($60B+ a year), video games ($140B+ a year), the collectibles market ($370B+ a year), and many other industries. NFTs represent a massive disruptive opportunity that can touch virtually every aspect of global culture and commerce.
As of early 2021, NFTs have now overtaken DeFi on Google search trends and hold the kind of broad mainstream cultural appeal that other crypto verticals lack. This is a key factor that makes us believe NFTs will be the first product category that onboards mainstream users into crypto. The platform that is able to successfully onboard both creators and purchasers of NFTs will capture tremendous value. We intend to be that platform.
In addition, we will make it dead simple for mainstream consumers to participate in DeFi yield earning strategies. Investors and lenders should be earning yields at 10 to 100 times (10-20%) at what is offered currently by traditional banking systems. Borrowers should have easier access to credit to finance their investments, businesses, and other enterprises. Further, this all needs to happen in frictionless and easy ways that are in stark contrast to the product experiences of today’s first-generation DeFi products.
Similarly, we believe there needs to be more compelling reasons for consumers and merchants to use cryptocurrencies and blockchain technologies for billion and trillion-dollar sized commerce opportunities to exist. Peer-to-peer and consumer-to-merchant cryptocurrency transactions need to be made far simpler than they are today. We need to propagate cryptocurrency payment rails that are superior to existing credit/debit cards and mobile payments that rely on fiat currencies and centralized systems.
To realize our ambitious vision, we will continue to develop and grow the Origin Dollar (OUSD) as a critical DeFi building block and money lego that is highly composable. It will power multiple mainstream consumer and merchant applications in the near future. We anticipate millions of users to be using applications powered by OUSD in the next few years without necessarily even realizing they are using an underlying DeFi product.
Origin Commerce Platform
Since our founding in 2017, Origin has focused on enabling commerce on the blockchain. We’ve powered sales of physical goods and offline services (e.g. home rentals). We’ve also formed marquee partnerships with Google Cloud and Amazon and dozens of merchant partners like Brave Software.
While we plan to address commerce across many different verticals, today we are keenly focused on crypto-specific commerce opportunities that target early adopters of our technology. In the last few months, we’ve had tremendous success in the non-fungible token (NFT) market.
We believe NFTs are a nascent but highly disruptive technology that will bring our crypto-centric commerce products to millions, if not hundreds of millions, of users in the next few years. At the time of writing, Origin’s NFT Launchpad set all-time records for largest music NFT sale at nearly $11.7M with 3LAU and largest viral video/meme NFT sale at $760k with the original viral video, Charlie Bit My Finger. The 3LAU sale reached mainstream media outlets like the New York Times and Forbes, CNBC, CNN, BBC, Time, NPR, ABC, NY Times, and dozens of other outlets covered the globally-viewed Charlie Bit My Finger sale. In both instances, Origin saw significantly increased community membership and engagement and interest in OGN following these record-breaking events. We believe that future blockbuster NFT sales will further introduce mainstream audiences to the Origin Commerce Platform and OGN.
The overall market for NFTs is about to hit an explosive inflection point, and Origin is very well positioned to take advantage of this opportunity. While NBA Top Shots has recently seen a decrease in secondary sales, over $200M of transactions were achieved in both February and March of 2021. In May, Larva Labs sold nearly $90M of NFTs in 24 hours with their Meebits launch. This was soon followed by mainstream business influencer Gary Vaynerchuk launching Veefriends successfully. It is clear that NFT sales are growing at an exponential rate and represent the fastest growing opportunity for crypto-centric commerce. Even more importantly, we are now seeing iconic global brands and personalities like Gucci, the Golden State Warriors, Playboy, and Paris Hilton embrace NFT technology to interact more directly with their fanbases.
However, we believe that the majority of the market misconstrues NFTs as simply scarce digital art. While digital art is one exciting vertical that we have been able to capitalize on, we believe Origin’s NFT Launchpad will redefine commerce in several other key verticals as well.
Origin’s NFT Launchpad will redefine commerce in several key verticals.
NFTs that are redeemable for offline goods
In May 2020, Grammy-winning DJ RAC released his $TAPE NFTs that were redeemable for physical cassette tapes. Little did he know that he would be setting the record for the final sale price of a single cassette tape, as $TAPE tokens redeemable for the cassette tapes eventually cleared $3,000 per token.
This is just one example of how NFTs have changed the landscape for limited-edition premium products. NFTs that represent physical offline goods can be authenticated on the blockchain. Influencers, artists, creators, and other merchants can now issue NFTs that are both certifiably scarce and representative of valuable physical items.
There is an enormous opportunity to use NFTs to power these creator communities. Because NFTs are freely exchangeable on the blockchain, they also inherently create an after-market for limited edition goods.
One needs only to reference StockX, the premium sneaker marketplace that is currently valued at $2.8 B, to recognize the possibility of NFTs flourishing in many verticals where scarcity and authenticity need to be enforced. Today, the company generates $400M in revenue by taking fees to certify that premium sneakers are legitimate and not fraudulent. Using NFTs that are tied to these sneakers would establish a clear sense of provenance as sneakers are sold from one buyer to the next.
In another manifestation of using NFTs connected to offline products, the limited goods do not need to be redeemed. For example, a collector can purchase an NFT that entitles them with the rights to redeem that NFT for fine art, luxury handbags, or other products but can store that product with the original manufacturer. Redemption can happen at any point in the future. Again, because NFTs are exchangeable, collectors could invest in luxury items with the hopes of these items appreciating in value. However, they no longer need to take physical delivery and can simply sell the NFTs representing the items in an after market to profit from their investments.
Taking this one model one step further, NFT-powered commerce can generate revenue even before products are developed or manufactured. In the web 2.0 world, we saw how crowdfunding platforms like Kickstarter and Gofundme were able to generate demand for creator projects. In the web 3.0, NFTs can be a better form to issue ownership of future redeemable products. Once again, because these NFTs are freely exchangeable they provide backers the ability to resell their ownership even before the projects are completed.
At Origin, we have conducted NFT sales for mega-influencer Jake Paul and One Republic frontman, Ryan Tedder, that enabled collectors to receive limited edition physical merchandise in addition to their NFTs. We have even helped secretive, but highly funded electric bike startup Micro pre-sell their earliest e-bikes that will come off the assembly line. In the far future, we imagine using NFTs as the technology for tracking ownership of major physical items like homes and cars instead of the arcane processes we have today, like going down to the local courthouse to make sure no one else is claiming to own the same property.
NFTs that access digital content
We intend to release NFT features that also provide holders access to digital content and services. For example, content providers can replace paywall subscriptions with NFT ownership. Users that have purchased NFTs can unlock premium articles, unreleased music, premium video content, or special features in social and mobile games.
Here are a few examples of how this might work. Today, Patreon influencers allow their super fans to access unique content through the platform. The company generates $50M of revenue and is currently valued at $1.2B. However, these subscriptions and individual payments are tied to unique users. In tomorrow’s world, creators can issue NFTs that unlock special video or music content instead.
In late Q3 2021, we expect many of our NFT sales to feature unlockable content. Users only need to have purchased NFTs in their Origin managed wallets or a web3 wallet like Metamask to get access to premium content offered by our many creators.
NFTs that are access tokens
A third opportunity that is a multi-billion dollar opportunity in NFT-powered commerce lies in experiential commerce. NFTs that are certifiable on the blockchain can guarantee authenticity of tickets for professional sports, concerts, and other live performances. This reduces the risk of fraudulent tickets and also maintains clear provenance of ticket resales.
Going back to the Patreon example, a creator NFT may enable a user to get a 1-on-1 video chat with their favorite celebrity. Another user can purchase a premium NFT that grants them backstage access to their favorite musicians concerts for life.
In our highly successful Bassjackers NFT sale, the winning bidder was given the ability to name a track and appear on stage with BassJackers at future music festivals and concerts.
The key to unlocking value in all of these crypto-centric opportunities with NFTs is making NFT issuance dead simple for creators. In addition, in contrast to existing players in the market like Nifty Gateway, we believe the creators should own the branding and have direct control over pricing models (e.g. different auction mechanics or tiered pricing). Origin’s NFT Launchpad gives creators and influencers more direct control over their content and their physical, digital, and experiential products. Just as many merchants have chosen Shopify over selling on generic marketplaces that do not allow for custom branding and direct relationships to end customers, we believe the same model will be successful for NFTs. Further, many creators prefer Origin’s NFT platform because they do not need to share the stage with other competing NFT drops that may be off-brand. We have also lowered the user experience barriers for newcomers to NFTs. While many of the other platforms require using cryptocurrency, we also offer the ability to purchase NFTs with credit and debit cards.
In the near future, we intend to form additional partnerships with additional mainstream influencers and iconic brands to power their NFT commerce initiatives. We believe there is a huge untapped market for monetizing premium, limited-edition online and offline goods and services through our latest NFT product upgrades to the Origin Platform.
We are especially excited about several NFT Launchpad upgrades that are scheduled to launch in Q3 of 2021.
Self-serve NFT launchpad
Today, Origin’s NFT Launchpad is a curated experience for our collectors and is an invite-only platform. For creators, we build custom storefronts that oftentimes require several weeks of engineering work. While this allows us to hold record-breaking NFT sales with top creators, the last thing we want to do in the long-term is to become the gatekeepers of which creators can launch NFT drops.
We have thousands of inbound requests from creators of all sizes, from verticals like music, art, sports, retail, and many others. We are excited to open the NFT Launchpad to all interested creators by the second half of 2021 with the launch of our self-serve WYSIWYG (what you see is what you get) editor.
Creators will be able to create Origin accounts, upload audio and visual assets for their NFTs and customized websites, and schedule NFT sales using a variety of different sale formas (e.g. 1 of 1 auctions, leaderboard auctions, open editions, limited editions, and more). NFT Launchpad will democratize NFT creation and sales. Importantly, Origin will share in the proceeds of NFT sales conducted by our creators, creating substantial revenue-generating possibilities for us.
Site-specific and Aggregator NFT Marketplaces
Secondary market sales are vital for true price discovery of NFTs and the maturation of this nascent market. We intend to build a marketplace platform for secondary market sales of all NFTs launched on our Launchpad as well NFTs from other platforms and marketplaces. The Origin team already has over 4 years of experience building peer-to-peer marketplace technology, and we are the leaders in this field. The original Origin Marketplace was launched on Ethereum mainnet in 2018 and supported tens of thousands of users and listings for a variety of goods and services. Origin fully intends on being the NFT marketplace leader and capturing NFT sales from our partner creators as well as creators who launch independently or with another platform.
Our marketplace product will allow for both site-specific marketplaces and a larger Origin-branded aggregator marketplace.
With the former implementation, secondary marketplaces can be run and curated by the NFT creators themselves. Again, these marketplaces can live on the individual creators’ websites. Gallerists and artists have always cared deeply about presentation and curation as it can have a strong impact on the price of their assets. In another scenario, one can imagine top brands like Marvel or the NFL wanting to showcase secondary sales of their NFTs in more brand-centric experiences. Letting creators control every aspect of their NFT from creation to secondary market sale is a key differentiator to Origin’s NFT platform over more generic NFT marketplaces. Fans of specific creators and artists will also appreciate going direct to the source instead of browsing through unrelated listings on a generalized marketplace.
With the Origin-branded marketplace, we will aggregate all our NFT sales on a single website that makes it easy for buyers to discover new creators. Site-specific marketplace NFTs will be aggregated to the Origin-branded marketplace. In the future, we will allow for creators like brands and celebrities to promote their NFTs on the Origin-branded marketplace. This is similar to how Google AdWords works and presents a potentially lucrative additional business model for Origin.
Creators are excited about custom NFT marketplaces because they allow them to better monetize their creations over a longer period of time. Artists will experience increased value capture from programmatic transaction fees attached to NFTs they create. This means that any secondary market sales will generate revenue for NFT creators in perpetuity. Previously, musical artists would only capture a small portion of this value through royalties and fine artists would capture no value from secondary sales.
Not only are secondary market sales important for price discovery, revenue sharing from these sales will be one of the key revenue drivers for Origin’s Launchpad. Far more volume is done on the secondary market than during initial sales and we expect record-breaking trades in the future. Origin intends to build a fully-featured NFT platform and ecosystem. We will develop the best end-to-end NFT platform in the space and capture massive value for our users, NFT creator partners, and our token holders.
OGN buybacks and other token utilities
We may conduct additional OGN buybacks over time using revenue generated from the various income streams that are being developed across the NFT launchpad (e.g. primary sales proceeds, secondary sales revenue share, paid promotion by creators). We conducted our first buyback at the end of May 2021 for $1.3M worth of OGN.
We also anticipate tightly coupling OGN into our self-serve and marketplace products. For example, we intend to experiment with allowing creators to stake OGN for increased revenue share. There may also be certain NFT sales that will be structured around buyers using OGN for special bonuses and perks (e.g. require OGN staking or payment for drawing/raffle sales). It is also anticipated that OGN will be the native currency for paid promotion on our aggregator marketplace.
Origin’s NFTs are currently Ethereum ERC-721 NFTs. While this effectively targets the early adopter community that has developed around Ethereum, we recognize that the minting costs of today’s Ethereum NFTs, oftentimes $25 to $50+ per NFT, make these NFTs prohibitively expensive for more mainstream adoption. In order to bring NFTs to the hundreds of millions of consumers, NFTs must be cheaper to mint. To tackle this volume-centric strategy, Origin will begin integrations with alternative blockchains and also explore Ethereum layer 2 solutions in Q3. Our goal is to enable creators to offer NFTs at $10 to $20 that can be purchased by their mainstream audiences in seconds with credit and debit cards. This will be especially important for NFT use cases related to merchandise, ticketing, and collectibles.
The Origin Dollar (OUSD)
In 1999, Yu Pan, one of PayPal’s original co-founders conceived of creating “the new world currency”, complete with interest yielding strategies and debit cards without having to connect to traditional banking systems. Several pivots and an eBay acquisition later, PayPal dropped its ambitions in this area.
Two decades later, Yu Pan, Origin’s founding engineer, and the rest of the Origin team have finally launched this new world currency.
The Origin Dollar is the first cryptocurrency stablecoin that automatically and passively provides users with the opportunity to earn yield while sitting in cryptocurrency wallets. Users do not need to stake/unstake or provide liquidity to earn yields across underlying DeFi protocols. While past performance does not guarantee future results, to date OUSD has generated, through the underlying DeFi protocols, annualized yields between 20% and 150% at any given time.
OUSD is a superior DeFi product for the masses. By removing all the complexities normally associated with earning fees through lending or supplying liquidity to automated market makers (AMMs), OUSD is highly accessible to users who are new to cryptocurrency technologies. Today, users need only to purchase OUSD on centralized exchanges or decentralized swap sites like Uniswap/Sushiswap to begin getting DeFi yield exposure immediately. Alternatively, users can mint OUSD with their existing stablecoins (DAI, USDT, USDC currently) on the OUSD DApp.
Current APYs and circulating supply are published transparently on the OUSD dashboard.
With OUSD, there’s no need to unwind complicated positions when you want to spend your OUSD. You can transfer it freely without having to pay gas to unlock spendable capital. In addition, OUSD gives you the ability to utilize a basket of leading DeFi opportunities with none of the hassles. The OUSD smart contracts deploy your underlying capital to a diversified set of yield-earning strategies, automatically rebalancing over time to achieve strong yields while diversifying risk. Earnings automatically accrue in your wallet and compound continuously while you hold OUSD. Again, no staking or lockups are required, making your OUSD as easy to transfer as any other ERC-20 token. OUSD also serves as an ideal unit of account. DeFi participants no longer need complicated spreadsheets to calculate their earnings as they can easily see their constantly updated OUSD balances in real-time.
OUSD uses two high-level strategies for generating yield--lending and market making.
DeFi lending platforms let users lend and borrow crypto assets without any middlemen. Both lenders and borrowers get more value from their crypto. Lenders earn interest, while borrowers deposit crypto as collateral to gain access to credit without traditional banking headaches. DeFi lending platforms currently provide far superior returns for lenders than are generally available in the traditional markets.
OUSD integrates with DeFi lending platforms that provide over-collateralized loans. Over-collateralization, combined with smart rules around liquidations, provide a reasonable level of security for lenders. Aave also additionally secures their lending pools with AAVE tokens respectively, further lowering risk.
OUSD integrates with two leading lending providers, Compound and Aave, that have a proven track record audited smart contracts, and have successfully lent hundreds of millions of dollars without issue.
Automated market makers (AMMs) have quickly risen as the preferred form of decentralized exchange on the Ethereum network. This is in part due to the difficulty of supporting order book DEXes on Ethereum 1.0 that can rival the instant and low-slippage experiences on centralized exchanges. Further, AMMs like Uniswap are relatively user-friendly and gas-efficient to use.
AMMs can only enable new markets when liquidity providers supply liquidity (e.g. multiple tokens for given trading pairs or pools). In return for providing liquidity, liquidity providers are rewarded with trading fees when other users swap tokens. For example, when traders swap USDT for USDC on Uniswap, they are currently charged 0.3% on top of gas fees. These fees are distributed pro-rata to liquidity providers on the USDT-USDC pair based on the percentage of total liquidity that they have provided.
The OUSD protocol routes USDT, USDC, and DAI to highly-performing liquidity pools as determined by trading volume and rewards tokens (e.g. Balancer rewards BAL tokens to liquidity providers). Yields are then passed on to OUSD holders. The OUSD smart contract is currently integrated with Curve, and may be integrated with Uniswap, Sushiswap, and Balancer in the future.
In addition to collecting interest from lending and fees from market making, we intend to automatically claim and convert the bonus incentives that are being distributed by many of the DeFi protocols. For example, Compound gives away COMP tokens, Balancer gives away BAL tokens, and Curve gives away CRV tokens. These bonus rewards will be regularly converted into stablecoins, deployed in the market, and distributed to OUSD holders in the form of additional yield.
OUSD is able to generate higher yields than competing protocols due to a combination of important design decisions that amplify the rewards that are returned to OUSD holders:
- Exit fees are returned to the pool, rewarding long term holders
- Price oracles favor the collective over the individual, again rewarding long term holders
- Smart contracts must manually opt-in to earn yield. This allows the protocol to put more capital to work than would be otherwise possible.
- OUSD smart contracts allow users to balance risk and reward more effectively than deploying capital in any single underlying strategy.
Origin's role in OUSD
OUSD is meant to be a tool that gives users easy and passive access to DeFi exposure. Origin’s role in the development of OUSD is ministerial rather than managerial. This means instead of actively managing OUSD as a business or actively managing the funds in the OUSD vault, Origin maintains the OUSD smart contracts as developers in order to keep the protocol functional and avoid catastrophic losses or failures for users. Origin does not intend to make strategic decisions to allocate funds from the OUSD vault. Funds in the OUSD vault are automatically deployed to the largest and most common DeFi protocols including Compound, Aave, and Curve, as outlined above. OUSD is a decentralized protocol on the Ethereum blockchain without active management. Funds are allocated by OUSD smart contracts, not Origin employees, and Origin developers chose the aforementioned DeFi protocols for their safety and ubiquity in DeFi rather than to seek maximum yields or profits. The OUSD protocol is 100% open-source and we are fast tracking OUSD to be governed in a totally decentralized fashion.
Readers can learn more about the technical details of OUSD on our documentation.
Benefits of OUSD
Mainstream cryptocurrency users now have the equivalent of a high-yield savings account automatically built into their Ethereum wallets whenever they are holding OUSD. This increases DeFi’s addressable user base from tens to hundreds of thousands of sophisticated users to tens of millions of users instantly. By comparison, Uniswap, the most widely used DeFi product to date has only interacted with approximately 250k Ethereum wallets since its inception.
Because OUSD makes it easy for consumers to switch between spending and savings mode, it can also become the ideal medium of exchange. Today, many merchants other than those dealing in black or grey markets do not have many incentives to accept cryptocurrencies. Because most consumers currently use credit cards and mobile payments, merchants are forced to accept payments predominantly with these methods. In the process, they are often charged a 2.90% credit card processing fee, with other payment intermediaries (e.g. merchant bankers and interchange networks) also increasing the cost of doing business.
For merchants that have traditionally been skeptical of receiving cryptocurrency payments, being able to accept a yield-bearing stablecoin that beats traditional savings accounts and instantly earns yield is a powerful motivator. Instead of losing money on each sale, they are instantly adding capital to their merchant accounts that compounds instantly, giving them more operating capital over time. For merchants that oftentimes face cash flow management and inventory issues, being able to accept a yield-bearing form of payment is extremely compelling.
OUSD creates the incentives for merchants to not only accept, but promote the usage of cryptocurrencies in their businesses. As more users hold and make purchases with OUSD, more merchants will similarly accept OUSD. These powerful network effects have the potential to gradually replace the payment rails for both online and offline commerce.
In the short-term, OUSD’s target audience encompasses the millions of cryptocurrency users in the world that are not yet invested in DeFi. An even larger opportunity lies in targeting the hundreds of millions of users that are currently using traditional peer-to-peer and merchant payment systems.
Today, PayPal boasts over 305M consumers and 22M merchants and processes over $200B of payments in a single quarter. Our aspirations are to begin penetrating that customer base with OUSD and future payments applications built on top of the OUSD protocol in the upcoming year.
We imagine a better future for online and offline payments that uses OUSD as the underlying payment rails. Below, we outline our vision for what we'd like to see built on top of the OUSD protocol. We also encourage our large community of supporters and open-source developers to build additional compelling products to bring DeFi and cryptocurrency payments to the masses.
Venmo meets high-yield savings and a debit card
Today peer-to-peer mobile payments account for trillions of dollars in transaction volume. In the United States, Venmo and Square Cash dominate. In China, cryptocurrency’s largest market by trading volume, Wechat and Alipay have near monopolistic holds on consumers and merchants. These simple, centralized payment apps are used by customers paying merchants and by friends and family transferring money to each other. Furthermore, in many markets, the US and Europe especially, bank cards are still the go-to way to spend money for online and offline transactions. Credit card companies, payment processors, and banks dominate this market and there are a variety of companies such as PayPal that assist merchants and consumers in using their cards online.
The billions of users using these existing payment methods have very little incentive to adopt cryptocurrency payments due to increased friction and lack of network effects.
We believe a new peer-to-peer payment app with an associated debit card built on top of the OUSD protocol can disrupt incumbents. Today, Venmo users shuffle money between their Venmo accounts and their checking accounts and credit cards. In the case of the former, money sitting in Venmo or checking accounts doesn’t earn any interest. Venmo balances that are funded by credit cards are even worse as there are fees charged by multiple intermediaries. In the later case, interest earned by users is usually negligible, especially when taking into account inflation. Cash back or rewards programs can offer users incentives but high interest rates for missing payments are a strong disincentive to users.
Tomorrow’s peer-to-peer mobile payment application powered by OUSD will introduce the killer feature of double-digit yields. Our version of Venmo will combine the ease of peer-to-peer payments with a high-yield savings account that beats traditional savings accounts by a factor of 10 to 100x.
The OUSD payment app will be built with a centralized mobile app and APIs to minimize user friction for mainstream users. Users will be able to deposit USD and/or other fiat currencies to the app and enjoy the seamless user experiences of centralized applications. However, on the backend, these fiat deposits will be used to mint OUSD. New users will hold their balances in OUSD in Origin custodial wallets without needing to understand cryptocurrencies. They will simply be able to earn industry-leading yields when they are not spending. Again, your OUSD is always earning & ready to be spent or transferred at the same time.
The viral effects of the future OUSD payment app cannot be overstated. Payment apps are by nature already viral, with users onboarding their friends and family in order to transact with them, establishing powerful network effects. Merchants quickly adopt the payment services that attract the most users. By adding in the ability to earn yield the very instant that any new referred user accepts funds from a referring user, we believe the viral coefficient for existing users referring new users will be multiples higher than ever seen before in a traditional payments application.
The OUSD debit card will be tied to the future OUSD payment app and will allow users to spend down their on-app OUSD balance. Whenever users want to use their OUSD, their OUSD will be converted to USD via Visa’s interchange network and be instantly accepted by 40 million merchants all over the world. Merchants will receive USD and need not know that OUSD was used as the underlying original currency to power the transaction. Again, when users’ OUSD is not being spent, it will automatically accumulate staggering yields that should be superior to any cash bank or credit card rewards program in existence.
Although we plan on launching with hosted or managed wallets, we believe that users should be in control of their own funds if they do not want to use managed wallets. While the service that we build will be centralized at the application and middleware layer, the core protocol is decentralized. Users will be able to eject from the managed wallet at any point in time to simply hold their OUSD in their own self-managed wallets within the same app. We imagine that more and more users will gradually migrate from managed wallets to self-hosted wallets over time as they become educated about the benefits of underlying protocol.
OUSD payments on traditional platforms
Getting online and offline merchants to accept payments that are powered by OUSD rails is a monumental step. However, further down the road, an even more ambitious objective is to get merchants to accept OUSD directly.
The incentives to accept OUSD as a merchant over traditional credit cards or mobile payments is extremely compelling. Merchants can earn double-digit yields upon the sales of goods and services versus getting taxed with multiple payment fees.
The very first e-commerce platform to accept OUSD is Origin’s own Dshop platform. However, Dshop is a relatively new platform, and the majority of online e-commerce stores are run by incumbents like Shopify and Woo Commerce.
Thankfully, both Shopify and Woo Commerce have mature developer platforms and APIs. We intend to build applications on these existing platforms that allow merchants to accept OUSD directly from customers that want to pay with OUSD. These developer plugins are relatively simple to build, and there are many existing examples of working payment alternatives.
For example, the Shopify app store currently already offers Coinbase Commerce, Bitpay, and GoCoin. We will release an OUSD payment app for merchants in the coming future.
Given the recent surge in both the price of ETH and the usage of the Ethereum network, gas fees are becoming increasingly prohibitive and a major deterrent for getting the kind of retail adoption that we want.
Ethereum is by far the most dominant layer 1 chain when it comes to DeFi activity and total value locked (TVL) today. However, as other layer 1 chains gain DeFi adoption, it is our intention to make OUSD accessible on other chains like Binance Smart Chain, Solana, Cosmos, and Polkadot which offer faster transactions and lower gas costs.
All of the yield for OUSD will continue to be generated on the Ethereum platform since that’s where the vast majority of capital and earning opportunities exist today. However, chain-specific versions of OUSD will be mintable by anyone who locks up OUSD in the cross-chain bridge. For example, you could lock 100 OUSD in the Solana bridge in order to generate 100 sOUSD which would be freely transferable within the Solana ecosystem. The original OUSD would stay locked in a smart contract where it would continue earning yield. Inside Solana, the circulating sOUSD tokens would rebase in lockstep with the OUSD that was locked in the smart contract. Anyone who wishes to exit would be able to redeem their sOUSD for the originally locked capital plus any yield that was generated while they were holding it.
Token Origin (OGN)
The Origin Token (OGN) is the governance and value accrual token for the entire Origin Platform and suite of products.
Decentralized governance for the OUSD protocol will happen first. Following the successful migration of making OUSD community-owned, we will begin the progressive decentralization of the Origin commerce platform as well.
Today, the OUSD protocol is already currently undergoing a progressive path to full decentralization. We’ve outlined four phases to full decentralization and are currently in phase 2.
OGN token holders will be able to create and vote on proposals to govern the underlying protocol. This may include:
- Adding/removing new types of yield-earning strategies
- Allocating capital across a basket of strategies
- Determining what fees are charged by the protocol
- Determining what incentives (e.g. OGN rewards for liquidity mining) are offered on an ongoing basis
Note that decentralized governance privileges will not apply to the centralized applications like the peer-to-peer payments product or debit card to be built on OUSD in the near-term. However, the underlying protocol will be fully decentralized before the end of 2021.
OGN holders will benefit directly from any protocol revenues and fees generated from products built on the Origin Platform. This includes on-chain revenue from OUSD as well as potential off-chain revenue sources from OUSD or our commerce products in the future.
Currently, 10% of DeFi yields generated from OUSD are collected as a protocol service fee. These on-chain fees are being used to buy back OGN on the market, generating consistent buy pressure for OUSD’s governance token.
Through decentralized governance, the community will be able to adjust service fee settings as well as other value accrual parameters.
- For example, the community may vote for variable service fees based on OUSD yield benchmarks (e.g. higher service fees when OUSD is returning 50%%+ yields vs. 20%%+ yields).
- Other community-proposed models may include directing these service fees to OGN holders directly as dividends to OGN holders.
- Additional models may reward larger fees to OGN holders that stake their tokens (e.g. OGN holders that stake for 3 months will receive more rewards than those that stake for 1 month)
OGN holders are therefore incentivized to promote OUSD. As OUSD circulating supply increases, service fees generated will also increase, directly benefiting OGN holders financially. The converse is also true. OUSD holders are incentivized to be OGN holders, so they can participate actively in the governance of the protocol. This creates a strong flywheel effect between Origin’s two tokens.
Since it is our intention to build powerful applications on top of the OUSD protocol like the new peer-to-peer payments product and debit card offering, we will also be able to create new monetization opportunities with these applications. For example, we may take a small percentage of OUSD yields as revenue to cover the costs of running the centralized infrastructure to power these experiences. Any profits that are generated off-chain can similarly be reinvested into the OGN buyback program or other fee distribution options mentioned above.
Origin was founded by Josh Fraser and Matthew Liu, two successful entrepreneurs who have built multiple venture backed companies that saw successful exits and who have worked together on multiple businesses in the past. They were joined by founding engineer Yu Pan. Yu Pan was one of the co-founders of PayPal alongside Elon Musk, Peter Thiel, Max Levchin, Ken Howery, and Luke Nosek. Yu Pan was also the first employee at YouTube and held senior positions at Google and Affirm.
Josh has been coding since he was 10 and has been involved in crypto since 2011. He founded the web optimization company Torbit which was acquired by Walmart Labs. Matt received his bachelors and masters in engineering from Stanford and was the third product manager at YouTube. Matt participated in the Ethereum crowdsale and has been involved in crypto since 2014.
Origin’s lead investor is Pantera Capital, the world’s oldest cryptocurrency fund. Other notable investors include Foundation Capital, Blocktower, Blockchain.com, KBW Ventures, Spartan Capital, PreAngel Fund, Hashed, Kenetic Capital, FBG, QCP Capital, and Smart Contract Japan. Well known angel investors include Steve Chen, founder of YouTube, Alexis Ohanian, founder of Reddit, Garry Tan, partner at Y Combinator, and Randall Kaplan, founder of Akamai.
With a renewed focus and mission to bring peer-to-peer commerce with NFTs and decentralized finance to the masses, we believe we are better positioned than ever before to unlock multiple billion dollar opportunities for the mainstream. While we are starting with users that already have basic understandings of cryptocurrency that already number in the millions, we will aggressively begin targeting mainstream users this year. In the next several years, our products will cross the chasm and our ambitions are to amass hundreds of millions of users using Origin products backed by our underlying protocols.