OPNX launches ‘oUSD’ credit currency for crypto margin trading

Crypto futures alternate OPNX has launched a credit currency for margin trading, in keeping with a July 5 assertion made to Cointelegraph from the alternate’s co-founder, Mark Lamb. Known as “oUSD,” the currency is offered in its “section 1” iteration, that means that customers can not obtain it with out depositing crypto property into the alternate. 

In a future “section 2” model, the platform intends to make oUSD obtainable to customers who deposit crypto into on-chain contracts to permit for doable “chapter remoteness,” Lamb acknowledged.

Within the currency’s litepaper, oUSD is recognized as an answer to 3 issues. First, lenders don’t need to belief platforms to carry money loans backed by crypto collateral. Second, exchanges and lending platforms don’t need to lend money to margin merchants, as this apply led to a number of bankruptcies through the 2022 bear market. Third, crypto derivatives merchants need “portfolio margin,” or the power to borrow and commerce primarily based on their crypto holdings somewhat than their stablecoin holdings.

To resolve this downside, oUSD exists as a “credit currency.” It may be bought at a 1-to-1 ratio with Tether (USDT) or used to measure revenue and loss when customers depend on Bitcoin (BTC), Ether (ETH) or different cryptocurrencies as collateral. Customers with a unfavorable oUSD steadiness should pay an rate of interest decided by holders of the platform’s native token, OX. Customers who’ve a optimistic steadiness money out by redeeming it for USDT.

In a dialog with Cointelegraph, Lamb claimed that customers would ultimately be capable to purchase oUSD by staking cryptocurrency inside good contracts exterior the platform. This may permit them to have chapter remoteness, defending them from any doable insolvency on the alternate.

“The issue with most exchanges is that […] you’re the dealer, the alternate, the ATS, the reporting agent, you are each leg within the monetary interplay,” Lamb acknowledged, additional explaining:

“If we are able to as a substitute take away that custodial facet and put that custody on-chain, we find yourself with a system the place customers have provable solvency, and so they know that their collateral will not be being touched. […] And so that you give customers that chapter remoteness, that safety of their property, they then are capable of commerce on a safer alternate.”

Associated: Kyle Davies to donate future OPNX earnings to 3AC creditors for ‘karma’

OPNX has been controversial since its inception, as two of its co-founders, Kyle Davies and Su Zhu, have been additionally the co-founders of failed hedge fund Three Arrows Capital. The alternate has been so closely criticized that its CEO, Leslie Lamb, has scolded investors for allegedly deceptive the general public by distancing themselves from it.

In response to a query about this criticism, Lamb argued that Davies’ and Zhu’s errors have helped them make OPNX a greater alternate.

“I feel Kyle and Su type of portrayed the zeitgeist of the final crypto bull market effectively, and so they misplaced nearly all of their internet value, however they’re constructing again, and that’s what I’m doing as effectively, and that’s what everybody ought to do, […] is simply construct again.”