[Proposal] Add OETH collateral

Proposal for the Introduction of OETH as Collateral to Mint R

Dear Raft Community,

I am Peter, a member of the core Origin Protocol team. Currently there is only one market live for using tokens as R collateral. This is a proposal for another new form of collateral, Origin Ether (OETH), to be added alongside the existing collateral option from Lido and soon Rocketpool.

OETH contract address: 0x856c4Efb76C1D1AE02e20CEB03A2A6a08b0b8dC3
Dapp/website: oeth.com
Curve pool: Factory-v2-298
Docs: OETH docs
Audits: OETH audits
Logo: SVG logo

Background on Origin Protocol

Origin was founded by Web3 veterans Josh Fraser and Matthew Liu in 2017 and is one of the most venerable projects in the space. Josh and Matthew are joined by the fully doxxed Origin team and community, which includes hundreds of thousands of members and open-source contributors. Origin has raised $38.1M from top investors including Pantera, Spartan Group, Foundation Capital, BlockTower Capital, Steve Chen, Garry Tan, and Alexis Ohanian, and currently maintains a multimillion dollar treasury. As a technology partner, Origin Story has helped launch some of the largest NFT projects to-date:

Origin Story was followed up with Origin Dollar, a yield-generating stablecoin that reached a TVL of $300m in 2022. Origin Ether is Origin’s 3rd and latest launch.

OETH Overview

Origin Ether was launched in May 2023 and is an ERC20 LST aggregator that generates yield while sitting in your wallet. OETH is backed 1:1 by stETH, rETH, frxETH, ETH, and WETH at all times; holders can go in and out of OETH as they please. Similar to stETH, OETH yield is paid out daily and automatically (sometimes multiple times per day) though a positive rebase in the form of additional OETH, proportional to the amount of OETH held.

OETH yield, currently ~9% APY, comes from a combination of:

  1. Deploying ETH/WETH on Curve, Convex, and Morpho
  2. LST validator rewards
  3. A 50bip exit fee is charged to those who choose to exit OETH via the dapp (completely avoidable if using a DEX), this fee goes back to OETH holders
  4. OETH sitting in non-upgradable contracts does not rebase, instead the interest generated from those tokens is provided to those that can rebase

These 4 yield generating functions combined enable OETH to generate higher yields than holding or farming any single LST manually. The current collateral allocation and yield strategies can be seen via the OETH analytics page. Future OETH collateral and yield strategies are governed by OGV stakers.

ERC-4626 Compatibility

OETH yield is paid out daily and automatically through a positive rebase in the form of additional OETH, proportional to the amount of OETH held. In the event that it would not be possible or not make sense to add OETH as a Raft collateral option due to needing to opt-into OETH yield generation within smart contracts, an alternate solution would be using Wrapped OETH (wOETH). Similar to Lido’s wstETH, wOETH is a ERC-4626 vault designed to accrue yield in price rather than in quantity. When you wrap OETH, you get back a fixed number of wOETH tokens. This number will not go up - you will have the same number of wOETH tokens tomorrow as you have today. However, the number of OETH tokens that you can unwrap will go up over time, as wOETH earns yield at the same rate as standard OETH. The wOETH to OETH exchange rate can be read from the contract, or via the OETH dapp. More information on wOETH and the wrapping/unwrapping process can be found within the OETH docs.

wOETH contract address: 0xDcEe70654261AF21C44c093C300eD3Bb97b78192

Exchange rate as of 6/20/23: 1 wOETH = 1.035224 OETH

Risk Mitigation

There are five possible risks when using OETH, and Origin is making sure to reduce each risk as much as possible:

Small market cap risk - Given OETH is a relatively new token, some may be worried that OETH is prone to new attack surfaces. While this may be true for other new tokens, OETH was built reusing 95% of the OUSD code, of which 10+ audits have been done since 2020. Not that long ago, OUSD reached a market cap of $300m without breaking, and without diminishing the APY it was capable of generating. Origin continues to work on OUSD, despite the lower market cap.

Counterparty risk - OETH is governed by OGV stakeholders around the world. Everything from yield generation to fee collection and distribution is managed by a set of smart contracts on the Ethereum blockchain. These contracts are upgradeable with a timelock and are controlled by hundreds of governance token holders. While the initial contracts and yield-earning strategies were developed by the Origin team, anyone can shape the future of OETH by creating or voting on proposals, submitting new strategies, or contributing code improvements. We intend for all important decisions to be made through community governance and limited powers to be delegated to trusted contributors who are more actively involved in the day-to-day management of the protocol.

Smart contract risk of the yield strategies - Origin is only using platforms for yield generation that have a proven track record, have been audited, have billions in TVL, maintain a bug bounty program, and provide over-collateralized loans. Over-collateralization in itself, combined with liquidations, provides a reasonable level of security for lenders.

Collateral risk - Origin has chosen 3 of the largest LSTs to ever exist to back OETH, and they have maintained their peg quite well since launch. They have also demonstrated significant growth in circulating supply, so the Origin team is confident that the 3 LSTs will maintain their peg and that OETH will remain stable to ETH. OETH is also using Chainlink oracles for pricing data for rETH and stETH, and plans to utilize Curve’s time-weighted price oracle for frxETH to ensure accurate pricing at all times. In situations where any OETH collateral falls below peg, OIP-4 disables minting of additional OETH tokens using the de-pegged asset.

Smart contract risk of OETH - Origin is taking every step possible to be proactive and lessen the chance of losing funds. Security reviews are prioritized over new feature development, with regular audits being done, and multiple engineers are required to review each code change with a detailed checklist. There are timelocks before protocol upgrades are launched, and deep dives into the exploits of other protocols are constantly being done to make sure the same exploits don’t exist on Origin contracts. Security is extremely important to the Origin team. OETH was built reusing 95% of the OUSD code, of which 10+ audits have been done since 2020. All audits can be seen on Audits - OUSD , and OpenZeppelin is now on retainer. On-chain insurance protocol InsurAce awarded OUSD the highest possible security rating of AAA, which only 4 projects on the InsurAce platform have received.


Since OETH is a newer token with a lower market cap, we are proposing the following conservative parameters for using OETH as collateral to mint R, alongside a comparison with the existing parameters for stETH and the soon to come rETH:

Minimum Collateralization Requirement 120% 120% 150%
Borrowing spread 0.50% 1.00% 1.00%
Redemption fee 1.50% 2.00% 2.00%
Collateral cap uncapped 20,000 rETH 3,000 OETH
Collateral cap per Position uncapped 1,000 rETH 150 OETH

We would be happy to adjust the above parameters based on feedback from the community and core Raft team and would be happy to answer any questions on Origin Protocol, OETH, or the proposal itself. Adding OETH as a market for R collateral will be mutually beneficial for both Raft and Origin Protocol, as it will increase the utility for OETH, while also increasing the Raft TVL and rollout of R. The Origin team can be reached at any time via the Origin Discord server.


Hi @pete and thank you for putting together this very thoughtful and comprehensive proposal. We’ll review it internally over the next few days and get back with our views soon. In the meantime, I’d invite the Raft community to take a look and give their thoughts.

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Great, thank you. I’ll be joining the Raft AMA this Thursday if there are any initial questions I can answer

I think the Origin team is conservative and careful - OETH is a great balance between risk and reward and I think this is a worthwhile proposal.

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Hi @pete

I have a question regarding the oracle for OETH. Our risk management framework necessitates using two different oracles for each asset we integrate into Raft. For stETH, Raft uses a Chainlink primary oracle, together with a Tellor secondary oracle. We will use the same setup for rETH.

My primary concern is the lack of reliable price feeds for OETH. I understand that OIP-4 disables further minting in case of a depeg - however, this doesn’t protect the Raft borrowers from a permanent depeg event related to, for example, smart contract failure or an exploit scenario where OETH doesn’t re-peg to its target price. Is there an ETA for a Chainlink oracle for OETH?

Many thanks,

These are valid questions to ask, David.

Over the past few years, OUSD (and now OETH, given they share 95% of the code) has regained peg relatively quickly by arbitrageurs during depeg situations. A great example of this was the massive USDC/DAI depeg during the weekend of 3/10/23:

Since OUSD is partially backed by USDC and DAI, the price of OUSD also fell below $1 for a period of time. During this time, arbitrageurs were able to buy OUSD at the cheaper price on AMMs, then redeem the OUSD via the dApp into a basket of stables (USDC, USDT and DAI), which they sold back to the market for a profit. With each dApp redemption, OUSD collected a fee (#3 on yield generation in the proposal above), and there were lots of redemptions during this weekend. When the price for USDC and DAI returned to peg, the entire cost was borne by those that sold their USDC and DAI for less than $1. If the price stayed down, LP’s will have traded more valuable OUSD for the less valuable USDC, and will have taken a loss.

In either case, OUSD holders have more stablecoins than they started with, with external parties bearing both the risk and the loss. OUSD holders made a total of $120K in yield during the market events. OUSD APY increased from ~4.6% to 42% and was trading back at 0.99 within 17 hours of losing its peg. OIP-4 as well as the 1/3 backing of OUSD by USDT helped prevent the OUSD peg from falling as low, and for as long, as USDC and DAI. OUSD fully restored to $1 within 36 hours as opposed to USDC and DAI which remained severely depegged for almost 3 days.

There is not yet a Chainlink oracle available for OETH, though it is something we are working towards. Unfortunately the Chainlink requirements are steep, so there is no ETA yet. There is a Dia Data feed available at the moment: https://app.diadata.org/price/asset/Ethereum/0x856c4Efb76C1D1AE02e20CEB03A2A6a08b0b8dC3/?asset=OETH

We can look into alternate oracle options in the meantime for OETH. Which data feeds are currently available for R?

Hi Pete, is the OETH oracle data feed available onchain on Ethereum? if so, can you provide the link

Raft currently using Chainlink and Tellor sources on Ethereum, we are open to support more if needed.
For R, we have not sought for an oracle yet.

Hi George, the Dia Data feed for OETH is available now via this link: Dia Data OETH Oracle

There is a Tellor oracle in the works right now, you can see the Github link for it here: OETH /ETH Spot Price Oracle

Would these two suffice?

Hi Pete, we would need two reputable oracles like Chainlink and Tellor publishing onchain prices that we can digest as minimum due to risk management. When you have these resources arranged, could you please let us know?

Yes, as soon as we have these oracles available we will let you know!

Just a quick update here on OETH growth - TVL has almost 3x’ed since submitting this proposal in June!

Current TVL: $76,206,141.70
TVL in ETH: 41,283.19


Glad to see. Any luck in securing any other price oracle feed other than DIA?

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The Tellor oracle is good to go! Redstone in progress, Chainlink still working on meeting their requirements.

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