Why OUSD is better than UST
Origin Protocol co-founder Josh Fraser talks stablecoins
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임준혁
임준혁 2022년 8월23일 16:30
오리진 프로토콜 공동창립자 조쉬 프레이저(오른쪽)와 임준혁 코인데스크 코리아 기자. 출처=임준혁/코인데스크 코리아
Origin Protocol co-founder Josh Fraser (right). Source: Felix Im/CoinDesk Korea

Origin Protocol co-founder Josh Fraser first discovered Bitcoin in 2010. To answer the question that most likely instinctively popped up in your head, he didn't hold on to it. 

"I read the whitepaper back in 2010. Intellectually, I was interested, but I had no idea that it'd become what it is today."

Fraser was intrigued enough, however, to write some mining software and run it on his laptop to mine his first block. After a while however, he turned it off, because his laptop was overheating.

He didn't get back into crypto until 2017, when he discovered Ethereum.

I met Fraser during his visit to Seoul, where he attended both Buidl Asia and Korea Blockchain Week 2022. I spoke to him briefly during my time in Miami in December 2021. He was friendly and open then, and this time was no different.

Fraser met his current partner Matt Liu at an early-stage venture fund, which didn't invest in their project but provided a free workspace.

Fraser and Liu built some projects before building Origin, including some cash flow businesses. They took the cash from selling those to build what interested them. They wrote software for trading bots and personal portfolio management.

It was around this time when Fraser started writing his own smart contracts to better understand the technology. He understood that certain pitches made no sense, such as the idea of a "decentralized Facebook" based on smart contracts.

"If you're paying to write data on the blockchain, who's going to pay to make a post a status update on a newsfeed? Are you going to pay 10 bucks to make a tweet?"

What captured Fraser's interest was the idea of decentralized marketplaces: home-sharing without Airbnb, car-sharing without Uber -- with smart contracts serving as the connecting point between users.  

But Fraser says they were too early. There's a lot of key tech that hasn't been developed yet. He thinks the idea will work in the future, but not now.

Instead, Fraser decided to focus exclusively on stuff native to crypto.

"Most of the complexity in our original idea of decentralized marketplaces came from the offline-online connection. It's difficult to verify that someone on-chain is a real person, or that an on-chain event happened in real life." 

Fraser and Liu looked toward NFTs, which were exclusively on-chain, and stablecoins. Their NFT experiment developed into what's now Origin Story, a platform that allows artists to sell NFTs on their own websites.

(I interviewed Liu about Origin Stories in Miami last year. Click here for that article.)

"I saw stablecoins take off, and how there was more value being transferred through stablecoins than through the Bitcoin network."

Fraser looked at the potential of stablecoin activities like yield farming, but realized that the process was too much of a hassle for most people to adopt. There was too much switching back-and-forth between the stablecoins and reward tokens, too much dependence on platforms like Uniswap, and too much gas paid through every individual transaction.

Fraser envisioned a stablecoin that earns yield while it's still in your wallet. Hence, Origin Dollar (OUSD) was born.

"As far as the user is concerned, you buy OUSD, keep it in your wallets, and the rewards generated from the supply are automatically paid to the wallet in additional units of OUSD. You don't have to take it out and put it somewhere else."

OUSD is backed by other stablecoins, such as USDT, USDC, and DAI. Anyone who wants to mint 1OUSD must provide one of the other stablecoins. OSUD is always redeemable for one of the aforementioned stables. OUSD pools are deployed to DeFi platforms like Compound and Aave to earn yield through trading fees, lending fees, or reward tokens. Origin's smart contracts convert that yield into OUSD and deposit it in users' wallets.

"Your money is simultaneously in savings mode and spending mode. Your money is always earning while always available for spending."

Fraser emphasizes that OUSD is backed one-to-one by the aforementioned stablecoins, and is at no risk of becoming the next Terra.

Fraser explains that if you ignored the billions of dollars locked into the Terra protocol and looked only at the design, you'd know it was destined to implode. He says that it was designed to work only in favorable market conditions.

At the height of Terra's success, Origin's team was frustrated at seeing so much capital flood to UST instead of to OUSD.

"We were losing so much capital to Terra, capital that we wanted to see go to Origin Dollar."

They decided to see if Terra's system was sustainable. Fraser says that upon investigating Terra and UST/LUNA, Origin's security engineers knew the whole thing was going to crash. Around a month later, it did.

Speaking of which, I ask Fraser for his thoughts on algos and the future of stablecoins in general.

"I hope we see a return to sanity. For a while, people got too high on wishful thinking."

Fraser doesn't see algo stablecoins going anyway. Engineers will keep tweaking and developing them, because there will always be an economic incentive to create new stablecoins to accrue new value. Fraser thinks we'll eventually see a more battle-tested model.

In order for an algo stablecoin to truly work, Fraser emphasizes that the community behind it needs to be much larger than the Terra community or any other algo stablecoin community we've seen so far.

"You need a lot of people to really believe in it and won't abandon it on the fly, people who are willing to buy it when it's cheap."

He also sees the need for a new distribution scheme, one that incentivizes people coming into the project at different time points, as opposed to current methods that exclusively benefit initial holders who dump at opportune times. 

I ask Fraser for his thoughts on the current bear market. He says downturns are when people find out what's overvalued and what's undervalued. He mentions he's been through a few crypto winters before, and doesn't seem too bothered. 

"I think it was probably needed, even inevitable."

I taper off our conversation by asking him about Origin's developments for the near future.

He mentions that Origin has recently launched a new governance token for OUSD, mentioning plans to give token holders more control over the network.

Before saying our goodbyes, I ask for some comments about Korea.

"I'm encouraged by the strength of Origin's community in Korea. Everyone seems to know us here, whereas we don't get the same level of recognition in the States."

제보, 보도자료는 contact@coindeskkorea.com



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