The emergence of several decentralized finance (DeFi) projects has taken up most of the transaction capacity of the Ethereum network. As a result, the blockchain has too much traffic and gas costs are substantially increasing, making it hard for users to transact on it. This congestion problem has made a negative impact on the broader DeFi space and is curtailing adoption.
In order to get around this concern, OIN Finance tapped on to the Ontology network, making it the first DeFi protocol built on the Ontology chain. Ever since they launched their project, developments have been geared towards making a vibrant community of users. But soon enough, they’ll deploy a system that can operate cross-chain.
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The mission of OIN Finance is three-pronged: become a gateway for DeFi, promote DeFi, and support its growth into maturity. Renard Zhang, CEO of OIN Finance, sees the problems suffered by the Ethereum blockchain but believes in the promise of the DeFi products built there.
And in order to maximize the potential of these projects, Zhang and his team went on to build a new protocol patterned before the products and services created on top of the Ethereum network.
What is Oin Finance
OIN Finance is a decentralized liquidity pool exchange platform built on top of the Ontology network. Its main products and services follow the model behind most DeFi projects running on the Ethereum network, which are: lending and borrowing, exchanges, and stablecoins.
OIN Finance’s ecosystem functions through its native applications such as the OINSwap, OINLend, OINDAO, OINWallet, and the USDO stablecoin. And once the platform already deploys its bridge technology, these applications can start working cross-chain.
One of the interesting models patterned after Ethereum counterparts is the OIN Swap platform. It gives users the chance to conveniently build their own decentralized exchanges (DEX) with their own market maker. Users can contribute to the liquidity of the network by staking their assets in OIN’s pool.
Much like other DeFi platforms, they also offer yield farming opportunities through services like OINLend where users can lend or borrow assets to earn from interest fees or to leverage their funds.
The main focus of the team behind OIN is to nurture its Ontology community first. If they achieve the objective of avoiding the problems caused by network congestion and increasing gas fees, then adoption becomes easier.
For now, the steps OIN has been taking lean towards building a community of early adopters by incentivizing them to take part in the platform’s initial staking process. Once they have enough people to support the Ontology-based platform, scaling up becomes the next path forward.
Attributes of OIN Finance
While it is built on top of Ontology, its design covers cross-chain compatibility and some DeFi features. Here are some of them:
OIN is working on a bridge technology that will help link Ontology with other DeFi platforms built on Ethereum. Their goal is to help it grow along with other projects. Eventually, the cross-chain architecture of OIN Finance can help widen its services, offering more options to its users.
OIN implements the Tendermint consensus algorithm to achieve consensus without mining, but instead, using the Byzantine Fault Tolerance (BFT) system. This way, even if a third of its nodes fail, the network can still reflect an accurate state of its network. This puts an end to the potential risks of mining being concentrated among those who have the biggest network capacity.
A reward system supported by its own stablecoin also ensures a steady flow of incentives for nodes to work and continuously maintain a healthy state of the network.
Fast and Secure
Through the Merkle proof system, OIN can establish a quick validation process for each transaction initiated on the blockchain. This works by putting up small chunks of information leading up to a “root transaction” on the ledger to be used to validate a larger database of information.
OINSwap V1 Pool
The Ontology network will be OINSwap’s main platform. Through its V1 Pool, users can launch their DEXes to swap OIN tokens with other supported digital assets. The prices of assets listed on the pool is determined by supply and demand.
OINSwap V2 Pool
Following the implementation of its link with the Ethereum blockchain, OINSwap will start listing ERC-20 assets that can be traded on the platform.
OIN has its own hot wallet that users can use to store supported tokens or conduct other transactions within the network. Once the bridge between Ontology and Ethereum is already deployed, OIN Wallet can begin interacting with Ethereum.
In that scenario, Ethereum-based platforms, such as Curve, Balancer, or Compound, can be enjoyed by Ontology users as well.
The development of the platform is designed to support community governance for greater decentralization. Important protocol decisions are voted upon by OIN token holders.
OIN DAO, apart from its governance function, also has the authority to issue USDOs, OIN’s US-pegged stablecoin and the first of its kind on Ontology.
USDO is collateralized by ONT tokens and has its own pool in Ontology. And in order to issue a USDO, users have to deposit ONT tokens to a specified smart contract for collateralization. As of now, the initial requirement for collateralization to mint a USDO is 300% of the loan applied.
If the collateral backing the loan falls below 180%, they will undergo a “clearing” process. This works similarly with liquidations in other lending platforms where the assets collateralized are sold to the open market and its corresponding USDO is burned.
Yield farmers can choose to just deposit their tokens in OINSwap or OINLend pools to become liquidity providers.
There are no third-parties facilitating the exchange of tokens in lending and borrowing transactions. Through smart contracts, users just have to deposit tokens that will become underlying assets that back the platform.
From the tokens deposited in smart contracts, OIN mints tokens priced depending on the prevailing market conditions.
If users loan other digital assets available in OIN’s pool, they have to post a corresponding collateral of 150%. Lenders earn interest fees with parameters governed by smart contracts that factor in the market supply and demand.
For lenders, interest rewards are accumulated per block. A portion of those interest fees collected is kept in OIN’s reserves to back the system in the event of mass liquidations happen, as well as to give lenders the chance to withdraw their tokens if they need to.
OIN Chain facilitates the whole cross-chain model of the platform, making smooth and frictionless interoperability functions possible. Through OIN Chain, the Ontology network can be virtually supplied with tokens based on the Ethereum blockchain.
OIN Chain performs like a multi-functional adaptor that links projects on Ethereum and Ontology, including all other public chains that the platform will be supporting in the future.
Liquidity Mining and Staking
50% of all OIN tokens in supply will come from liquidity mining and staking. Stakers can contribute to the supply through USDO collateral pools that store assets in OIN DAO and OIN Lend.
When OIN tokens are generated by liquidity miners, they are supplied directly to OIN Swap’s liquidity pool. As soon as the cross-chain bridge is operational, OIN Lend’s pool can start accepting ERC-20 tokens from stakers.
Staking rewards will contribute at least 40% of all minted tokens every day, with the other 60% coming from liquidity mining rewards. This is only an initial set-up however since OIN DAO can vote to restructure the distribution for reward allocations later on.
A DeFi platform built on top of the Ontology network is new, but it is off to a promising start. One hindrance to many DeFi projects right now is the volume of traffic in the Ethereum platform. It affects adoption and the transactions it can handle. Surely, the community is looking forward to a new innovation that doesn’t suffer from the same bottlenecks.
If the OIN project proves to be successful, they can be one of the biggest competitors to earlier DeFi projects on top of the Ethereum network. But all in all, it is a win-win situation for the whole DeFi and crypto space.