Introduction to Oxygen.org

What is Oxygen.org

Oxygen.org is a DeFi Prime Brokerage Protocol built for the future to support 100s of millions of people. It can help you, as a holder of digital assets, generate liquidity, earn yield, borrow assets to go short, get trading leverage against your portfolios of assets.

It’s 100% decentralised, 100% non-custodial, 100% on-chain. All transactions are purely peer-to-peer with no involvement from a centralised operator.

A key reason why Oxygen.org is possible today is Serum Ecosystem + Solana Blockchain infrastructure. Solana is a future-proof blockchain currently supporting 50,000+ transactions per second, for less than $0.0001 each. Serum’s 100% on-chain order book is at the core of Oxygen protocol helping match borrowing and lending orders as well as execute risk-management through Serum’s decentralised exchange (coming soon).

How does it work?

Create a new pool.

Deposits your assets into the pool.

Mark which assets can be lent out and on what terms. You automatically get matched with someone who wants to borrow the asset and you start generate passive $$$.

You can also select assets to borrow, against your portfolio as collateral. You will get matched who wants to earn yield lending the asset.

It’s that simple.

Oxygen protocol ensures that your assets are safe when they are lent out, that borrowers find lenders

How is Oxygen.org different from other borrowing / lending protocols?

It allows for a more efficient use of your assets in 3 key ways:
  1. 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.
  2. 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.
  3. 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.

Why Oxygen.org?

DeFi financial instructure should have its own solution(s). So we’ve built our version of it leveraging decades of Wall Street, software engineering, high frequency trading and cybersecurity experience. It’s open sourced - for the community to use and improve it.

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.

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.

How do I use the service?

You can access Oxygen protocol in 3 key ways:
  • UI + Smart Contracts: htpps://app.oxygen.org
  • API
  • Smart Contracts on Solana Network

Oxygen protocol is open source (to be). It can be used through native UI or be integrated into other products. It’s been created with composability in mind, meaning you can use it as a building block of something much bigger.

What is the cost of the service?

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.

Solana blockchain charges $0.0001 per transaction, orders of magnitude less than Ethereum Blockchain. This and its orders of magnitude higher speeds make Oxygen protocol possible to be operated on a fully decentralized basis.

Where are my deposited funds stored?

Your assets are stored in Oxygen smart contract. The code of the protocol is open source, verified and audited by third party auditors (in progress).

Is there any risk?

No platform can be considered entirely risk free. The major risks related to our platform are:
  • Smart contract risk (risk of a bug within the protocol code)
  • Liquidation risk (risk of the collateral liquidation process)

Security is a process, not a destination. We work with leading experts in the world to ensure your assets are safe and the protocol performs exactly as described.

First, 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.

Second, we are engaging Trail of Bits and/or other leaders in cybersecurity to provide software assurance to ensure maximum safety.

Third, we are working with a top-4 audit firm in the world, to review the Oxygen protocol and provide IT Assurance.

Fourth, we intend to run large bounty competitions to reward people to make the Oxygen protocol more secure.

Oxygen (OXY) tokens

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.

Who are users of Oxygen.org protocol?

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.

Economic functions (EF) of repo

Users and patential users of Prime Brokerage Protocol

Banks Hedge funds Money market funds Insurers pension funds Longonly asset managers Corporates Individuals VC Funds Crypto Exchanges
EFI, Low-risk
option for liquid
assets investment
+ + + + + + +
EF2,
Transformation
of collateral
+ + + + + +
EF3, Supporting
market efficiency
and liquidity
+ + + + +
EF4, Facilitating
hedging of risk
+ + + + + +
EF5, Enabling
monetization of
liquid assets
+ + +
EF6, Utility
usage
+ + + + + + + + +

Key components

Pools

In Oxygen, 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

Risk-management

Safety of assets on the one hand and value-adding leverage on the other are key to any borrowing-lending protocol. There are several things which are important to get right when designing it.

In Alpha version, we start with the following:
  • Initial/Maintenance/Critical/Reset LTVs - specific to each asset
  • Reset LTV = Initial LTV
    • Whenever LTV > Maintenance LTV, the pool LTV needs to be restored to Reset LTV through putting in more assets or selling existing ones
  • Maintenance LTV = Critical LTV
    • This means that if pool LTV > Critical/Maintenance LTV, pool can immediately go into liquidation.
    • So it’s best for pool owner to have a meaningful cushion between LTV and Critical LTV or be ready to move fast additional assets into the pool
  • Liquidation discount table specific for each asst
    • Based on size of position, estimated daily move (based on weighted average of short-term and medium-term intraday move)
  • Liquidation model
    • Liquidation Initiator changes state of pool to Liquidation State when LTV > Maintenance LTV
    • Liquidation Initiator has 1 minute exclusivity after the change of state of the pool into Liquidation State to buy pool assets (proportionately) at a discount (based on Liquidation discount table) in exchange for one or several tokens that the pool owes
    • After the first minute, any Liquidator can buy assets in the portfolio at a discount in exchange for one or several tokens that the pool owes
    • Liquidation prices for the pool assets are fixed at the time of the initiation

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.

Glossary