Verifiable Collateral For DeFi Opportunities: OpenDAO Stable Coins On The Elrond Network
Stable coins represent an important bridge between centralized and decentralized finance. They allow synthetic assets and DeFi opportunities to be anchored in relatable value and ease the transition from traditional finance to a truly open and global financial ecosystem.
Various types of stable coins come with various types of trade-offs:
- Censorship risk where the coin is governed by a centralized issuer
- Trust risk where the collateralization is intransparent
- Value risk where the coin is vulnerable to value swings via flash loan attacks or other exploits of temporary value fluctuations
For DeFi products to finally take off, the transition to fully digital financial services needs to be underpinned by a strong layer of confidence stemming from reliable stable coins.
That is why we are excited to announce that OpenDAO stable coins will be available for DeFi products on the Elrond Network!
“Adoption will happen when the new capabilities of the digital financial system will be combined with the same level of trust market players have in the traditional system. It will be interesting to explore the opportunities created by the hybrid collateralization mechanism proposed by OpenDAO” said Beniamin Mincu, Elrond CEO.
OpenDAO enables real-world assets such as stocks, bonds, and real estate to be used meaningfully in the DeFi ecosystem via permissionless, trust minimized transparent, secure, and automated protocols. The protocol enables a basket of on- & off-chain collateral to be used for minting stablecoins, increasing the resulting tokens’ reliability.
The collaboration will first enable the ERC20 version of EGLD to mint ERC20 EGLDO tokens, a stable coin pegged to $1 USD, which can be further used in DeFi products. EGLDO tokens will be transferrable as stable coins on the Elrond mainnet.
The long term collaboration is exploring the deployment of OpenDAO smart contracts on the Elrond Network, to replicate their functionality also on our mainnet and leverage the benefits of our inexpensive & near-instant token transfers, 30% smart contracts royalties, and overall high throughput.
“We are excited to be collaborating with the Elrond team to bring more utility and interoperability between protocols. The EGLDO stable coin is going to be a powerful financial instrument, a boon for our respective communities, and a cornerstone for development, not only for Elrond and OpenDAO, but for decentralized finance, as a whole. Applause out to the Elrond team and community for helping make the future happen together.” said Sean Qian, CoFounder, OpenDAO
The collaboration is important for the Elrond ecosystem because it enables interesting new opportunities for eGold holders, such as “going long” by adding to their eGold position using funds obtained from collateralizing their existing holdings, as well as any DeFi opportunities enabled by a reliable stable coin.
Elrond is the internet-scale blockchain, designed from scratch to bring a 1000-fold cumulative improvement in throughput and execution speed. To achieve this, Elrond introduces two key innovations: a novel Adaptive State Sharding mechanism, and a Secure Proof of Stake (PoS) algorithm, enabling linear scalability with a fast, efficient, and secure consensus mechanism. Thus, Elrond can process upwards of 15,000 transactions per second (TPS), with 6-second latency, and negligible cost, attempting to become the backbone of a permissionless, borderless, globally accessible internet economy.
OpenDAO enables real world assets such as stocks, bonds and real estate to be used meaningfully in the DeFi ecosystem via permissionless, trust minimized, transparent, secure and automated protocols.
OPEN token holders own and control the OpenDAO. Token holders will eventually decide on which assets can be used as collateral for both the liquidity pools and USD minting. OPEN will also be used to incentivise actions in the OpenDAO ecosystem.