RRC-9: Treasury Diversification and Yield Generation with OUSD


Convert x% of $RARI into OUSD for DAO treasury diversification and yield generation

Problem / Opportunity

The Rarible DAO treasury, consisting mainly of $RARI tokens, grows only with price appreciation of the $RARI token. By converting a portion of the $RARI into OUSD, the DAO will diversify the treasury, adding protection against unfavorable market conditions, and will generate yield, extending the runway of the DAO passively.

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 (more than 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 manually. 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 is no set emission schedule for OUSD - similar to stETH, OUSD is minted on demand when users lock their stablecoin into the protocol, and burned on demand when users exit OUSD for the collateral stablecoin. OUSD is completely non-custodial, there are no lock-ups, terms, or conditions. 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.

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 ~$34.8m as of April 3 2023, growing each day with each rebase.

Estimated Return

Please use this calculator to estimate the OUSD return per month and per year over 16 quarters. On the calculator, cells in green are investments made at the beginning of the month (if the DAO would like to initiate recurring conversions into OUSD) while cells in orange are months with no additional OUSD investment. Parameters you may want to change and explore in the calculator are cells B70 - B73, B76 - E79, and B81 (outlined in bold boxes). To change the OUSD APY, investment amount, or test transaction amount, select File > Make a Copy.

Monitoring and Reporting

Occasionally, DAOs choose to appoint a delegated treasury team to help keep track of the OUSD investment, participate in the weekly allocation votes, and initiate the investments into OUSD. While there is no need to actively manage an OUSD position due to the automated features of OUSD, Rarible may want to appoint a similar treasury team.

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 core team and community 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:

Contracts/Technical Requirements

Very little technical work is necessary to execute this proposal. The OUSD dApp is already available within the Gnosis app catalog. Rarible will first convert the $RARI tokens into stablecoin, then into OUSD using the OUSD dApp within Gnosis, and finally 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:

Use of funds

Funds converted into OUSD will be deployed across the various audited strategies for yield generation. There are no KYC, KYB, or partnership requirements to earn yield, all that is necessary is to hold the tokens in a rebase-capable wallet.

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 all smart contracts are now owned by the DAO.

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 or re-gain 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 four projects on the InsurAce platform have received. Origin also holds two of the top four spots on the Immunefi leaderboard when sorted by average response time to pay or close a bug bounty.

Test Cases

A test case for converting idle DAO treasury assets into OUSD can be seen with Popcorn Network:

OUSD is going through the governance process for DAO treasury investment with several other DAOs, including:

Several OUSD integrations are also in process, including:

Peg Stress Test

Since OUSD is partially backed by USDC and DAI, the price of OUSD also fell below $1 for a period of time during the weekend of March 10, 2023. 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 the yield generation section 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. 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.

As mentioned earlier in the proposal, in situations where the price of DAI, USDC or USDT fall below $0.998, OIP-4 disables minting of additional OUSD tokens using the de-pegged asset. OUSD fully restored to $1 within 36 hours as opposed to USDC and DAI which remained severely depegged for almost 3 days.

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.

Team Members

  • Peter Gray: BD Manager. He has been with Origin Protocol for the past 9 months and has been researching/experimenting in the blockchain space since 2013.
  • The full Origin Protocol core team is available on the Origin website

The contact person for this project will be Peter. His contact information is peter@originprotocol.com and his Discord handle is SlagathorTheMammothKing#7632.

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.


Peter will attend each community call to provide updates on OUSD. Potential updates may include OUSD yield over the past week, total yield generated for the DAO, and/or new OUSD yield strategies. If Peter is unavailable, someone else from the Origin team will attend the calls to provide updates.

Origin Protocol links:

1 Like

Thank you so much for coming up with an extensive proposal to diversify our treasury.
I think the main essence of this proposal is:

  • There are stable-coins that bring no interest, here’s OUSD that does bring interest.

To me it makes sense for projects that keep some part of the treasury in stable-coins such as USDC, USDT to diversify a part of that into OUSD and enjoy a yield.

For RARI Foundation it makes a little less sense since RARI foundation only keeps $200k in USDC for several months of operational budget and all the rest in $RARI so for foundation it would be:

  • Sell $RARI to OUSD.

That would create a downward pressure. Mostly foundation tries to sell as little as possible - and distribute RARI without selling in locked form to avoid selling pressure.

Those are my thoughts

This is understandable, and is part of the reason why there was not a timeline added to this proposal. It is also why the proposed amount was listed as “x%” instead of a hard number. A TWAP or VWAP strategy may be useful over multiple weeks or months to minimize downward price movement on $RARI

We would be open to adjusting the proposal to include (or replace the $RARI with) USDC if the DAO, delegates, and great community agree it makes more sense, as these stable are also non-yield generating on their own.

I also think selling RARI to obtain OUSD is not the best idea at this time. In the future if the Foundation has extra stablecoins in the treasury we could reconsider OUSD at that time.

Hey everyone,

Thanks for the proposal Peter, adding on in the event that the community wants to move forward with this.

SIZE Markets is an on-chain OTC protocol. SIZE primarily works with treasuries to promote active management, create runway, and diversify assets.

We recently published an article about treasury diversification here. Good point by @insider0x and agree.
Only add would be to suggest using vesting parameters vs selling open market to hedge against market impact. 6 month lock + 6 month vest has been common. Rarible can then swap into any stable after that.

Consider the recent examples of VC buyers x whale dumping OTC trades on the market, using SIZE protects against that.

Looking forward to thoughts and feedback.


SIZE team

I think this is a great idea, and a great start for the investment strategy mentioned by @Firefly808 in the Rari discord channel

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hey @pete, props on a well-written proposal. I share the sentiment expressed by @insider0x about the sell pressure on the RARI token. Given that only $200K is kept in stables this makes little business sense.

Would you mind expanding on this :point_down:

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Sure! We can adjust the proposal to instead utilize the $200k that is kept in stablecoin, instead of selling RARI and converting into stables.

Looking at the treasury wallet holding the USDC, the tokens are not being put to use while sitting idle. With the OUSD APY over the past few months, this comes to over $800 per month in missed profit. OUSD is 1:1 with USDC, so converting USDC into OUSD would be a minimal expense, but would have the major upside of the continuous daily yield generation, directly into the wallet. Given OUSD is completely liquid, the DAO could spend the OUSD in the same way it might spend USDC when expenses arise.

@andreitr I am also curious on your thoughts on my last comment with @SIZE here ^

Thanks. @Firefly808 any feedback or thoughts?

Thanks for the response. This sounds reasonable but I will have to defer to someone more experienced in treasury management to do the cost-benefit analysis. Thanks for taking the time to break this down @pete.


Does the DAO currently have anyone core members or delegates experienced in treasury management who can handle this analysis?

1 Like