Extend Sushi Runway With OUSD


Sushi will convert X% of the idle USDC from the treasury into Origin Protocol’s OUSD to generate yield and extend Sushi’s runway, after completion of the Clawback.


Following the ratification of the Kanpai 2.0 implementation proposal and several successful BD deals, the Sushi treasury will soon experience an influx of USDC. Rather than sitting idle, converting a small portion of the USDC into OUSD will put the funds to work to passively generate yield, helping extend Sushi’s future each additional day it is held within the treasury.


Origin Protocol has been interacting with and utilizing Sushi products and contracts for some time now. Origin would like to see Sushi survive the bear market we are all currently experiencing and believe the Origin Dollar will be a key component to this. The yield generated from OUSD will help cover Sushi’s expenses throughout the year and will assist with subsidizing the required funds that led to setting the Kanpai treasury payout ratio to 100%. Greenlighting OUSD as a treasury investment option will also position OUSD for future stablecoin-related proposals involving the conversion of treasury assets, or non-stable proposals such as the recently passed Merkle Tree Clawback, which will bring forth an abundance of Sushi tokens.


The Origin Dollar (OUSD)

OUSD is an ERC20 stablecoin that generates yield while sitting in your wallet. Backed 1:1 by USDC, DAI, and USDT at all times; holders can go in and out of OUSD as they please. Yield is paid out daily and automatically (sometimes multiple times per day) though a positive rebase in the form of additional OUSD, proportional to the amount of OUSD held.

OUSD yield, currently ~5% APY, comes from a combination of:

  1. Lending collateral to Aave, Compound, Morpho, Curve, and Convex

  2. Reward tokens (AAVE, COMP, CRV, and CVX) are automatically claimed and converted to stablecoin

  3. A 25bip exit fee is charged to those who choose to exit OUSD via the dapp (completely avoidable if using DEX or CEX), this fee goes back to OUSD holders

  4. OUSD sitting in non-upgradable contracts (about half the OUSD in existence) does not rebase, instead the interest generated from those tokens is provided to those that can rebase

These 4 yield generating functions combined enable OUSD to generate higher yields than lending directly to any single protocol. Each week a governance vote is held to determine the best allocation of OUSD collateral between the whitelisted strategies, voted on by OGV holders. OGV is the governance token for OUSD, and any token holder can participate in these votes after staking their OGV for veOGV. OGV holders also have the ability to propose new yield strategies for OUSD.

There are no lock-ups, terms, or conditions with OUSD; it’s completely non-custodial. Any web3 wallet should be able to support OUSD and its rebasing function, including hardware wallets and multi-sigs. There’s no need to ever again give up the keys to a 3rd party platform, such as Celsius, Blockfi, or FTX, to earn yield.

OUSD performance during the USDC/DAI de-peg

During the weekend of March 10 2023, both USDC and DAI fell from their $1 price point. 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 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% (7-day trailing) and was trading back at 0.99 within 17 hours of losing its peg. OUSD fully restored to $1 within 36 hours as opposed to USDC and DAI which remained severely depegged for almost 3 days.

Utilizing Sushi With The OUSD Ecosystem

Origin has had a productive history with SushiSwap over the past few years:

In 2020, SushiSwap added an OUSD Pool to earn SUSHI without impermanent loss:

In 2021, Origin decided to continue using Sushi indefinitely.

In 2022 and 2023, Origin has been routing a majority of the OUSD harvest transactions through SushiSwap. More information on the harvest can be found on this page within the Origin docs.

Origin has also added SushiSwap as an option for users to route USDC, USDT, and DAI into OUSD from within the OUSD dapp:

Contracts/Technical Requirements

Very little work is necessary to execute this proposal. The OUSD dApp is already available within the Gnosis app catalog. Sushi will convert the USDC into OUSD using the OUSD dApp within Gnosis, and then will “Opt in” to yield generation by clicking the Opt in button within Gnosis or by calling the rebaseOptIn() function.

A screenshot of the Opt in button on Gnosis can be seen here:

Organizational/Partnership Requirements

There are no KYC, KYB, or partnership requirements to earn yield with OUSD. All that is required is for Sushi to hold the tokens in a rebase-capable web3 wallet.

Monitoring and Reporting

While there is no need to actively manage an OUSD position due to the automated features of OUSD, monitoring of the current OUSD APY, strategies, and backing collateral, is always available in real time on the OUSD Analytics page. A three month day-to-day OUSD APY can be seen on this page on the analytics site, updated daily, while a longer history of the OUSD APY is available via this Dune query. API endpoints containing OUSD data are also available via the API page of the OUSD docs. To assist with reporting and decision making, the Sushi team can use this link to join the distribution list that will receive a weekly OUSD analytics report. Here is an example analytics email from November 2022:

Exiting OUSD

There are no lockups with this proposal, Sushi can move in and out of OUSD as the core team, DAO, and community desires. OUSD remains completely liquid at all times, and can be spent in the same way as its backing stablecoins, or unwound at the speed of the Ethereum blockchain, if unexpected expenses were to arise. OUSD on-chain liquidity is in the tens of millions, with the Curve Factory Pool containing the majority of the liquidity.

Security Considerations

Risk Mitigation

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

Counter-party risk - OUSD is governed by 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 OUSD 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.

Stablecoin risk - Origin has chosen 3 of the largest stablecoins to ever exist to back OUSD, and they have stood the test of time and maintained their peg quite well through multiple bull and bear cycles. They have also demonstrated significant growth in circulating supply, so the Origin team is confident that the 3 stables will maintain their peg and that OUSD will remain stable. OUSD is also using Chainlink oracles for pricing data for DAI, USDC and USDT to ensure accurate pricing at all times. In situations where DAI, USDC and USDT fall below the $1 peg, OIP-4 disables minting of additional OUSD tokens using the de-pegged asset.

Smart contract risk of OUSD - Origin is taking every step possible to be proactive and lessen the chance of losing funds. Security reviews of OUSD 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. 7+ audits have been done since 2020, all of which 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, of which only 4 projects on the InsurAce platform have received.

History of 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, released in 2019, has helped launch some of the largest NFT projects to-date:

In 2020, Origin Protocol’s second product, the Origin Dollar, was launched. In early 2022, OUSD reached a market cap $298m, with no issues, and without diminishing the daily rebase payments; OUSD can easily function with scale. Since OUSD is backed 1:1 by its collateral assets at all times, and OUSD and its collateral are stablecoins, OUSD market cap = OUSD supply = OUSD TVL. The current OUSD market cap is ~$31m as of March 20, 2023, growing each day with each rebase.

Other protocols previously holding idle USDC, such as PopcornDAO, have generated thousands of dollars in yield for their treasury by converting a portion into OUSD - we would like to see the Sushi treasury experience the same success.

Many members of the Origin team, including both founders, are holding a significant portion of their personal wealth in OUSD. Origin Protocol’s corporate treasury is also holding millions of dollars in OUSD. We have skin in the game and are willing to put our own money at risk with the code we have written.

  • Yes - Convert X% of the idle stablecoin into OUSD
  • No - Do not invest in OUSD

0 voters

1 Like

Sushi doesn’t really have any idle USDC, that’s why bentobox exists to put funds to use and earn safe yield

1 Like

There should be several million USDC entering the treasury throughout this year, per the Kanpai 2.0 proposal.

DAI and USDT are also 1:1 with OUSD, if the Sushi community would prefer to use those stables instead, though it may be a while before those stables can be used with the proposal from Head Chef today.

1 Like

Appreciate the post, Pete. I think the opportunity to diversify the Treasury is important, and these proposals help provide options for the DAO to produce the most value. It would be great to see more feedback from the community regarding this proposal.