OIP-3: Onomy Reserve (ORES)

Onomy Improvement Proposals (OIPs)
1

Abstract

The Onomy Reserve (ORES) is a Decentralized Reserve Bank, integral to achieving the convergence of Forex and Decentralized Finance by providing on-chain minting of stablecoins, or denominations of fiat currencies.

Motivation

A decentralized methodology to mint stablecoins benefits high-powered institutions, as well as democratizing access to stablecoins for individuals across payments, storage of money, currency exchanges and transfers. In conjunction with the scalable Onomy Network, Arc Bridge Hub, and the Onomy Exchange - the ORES would be a significant addition to Onomy’s ecosystem by opening FX markets on the ONEX and utilizing the Arc Bridge Hub as a gateway for liquidity across all integrated blockchains.

Specification

Proposed Onomy Reserve:

  • Multi-currency support (USD, EUR, YEN…)
  • Integrate NOM into a multi-stablecoin right-to-mint model
  • Enable a denomination staking rate to ensure appropriate capital inflows and outflows
  • Minimum Collateralization Ratio dictates maximum amount of denoms minted
  • Reserve Capture Ratio dictates capture of NOM by reserve
  • Reserve Burning Ratio dictates ratio of captured NOM that is burned to that which is held by reserve
  • Closed loop: No outside oracles, the Onomy Exchange provides pricing data via its FX markets
  • All parameters voted on by the Onomy DAO of NOM token holders

Rationale

The stablecoin market cap continues to grow significantly. Currently, the US Dollar dominates overall stablecoin market cap. It is expected that as the stablecoin market cap grows, various national currencies will begin to have meaningful volumes and share of the market. A multi-trillion dollar total market cap with various national currencies is an inevitability. Thus, the Onomy Reserve must be have multi-currency support.

NOM, as the native coin of Onomy, must play an integral part in the minting process. Rather than a strictly collateral-based issuance with endogenous collateral that we have seen fail before, Onomy Reserve proposes a right-to-mint model. Any endogenous collateral should not impact market pricing.

The Denomination Staking Rate, Minimum Collateralization Ratio, Reserve Capture Ratio, and Reserve Burning Ratio all provide levers that will impact the system stability and drive liquidity to where it is needed for balance to be upheld. These parameters enable the Onomy DAO to adjust the system programmatically via on-chain voting.

STATUS: DRAFT

5 Likes
3

We see the decentralised over collateralised SC models starting to get a lot of attention and other L1s also adopting this architecture for their DeFi eco systems - cosmos eco system also needs trusted decentralised over collateralised stable coins to be developed as this architecture is battled tested and proven to be the best model for DeFX on DeFi rails and the future of FX on-chain

4

As an addition to above outlined work for the Onomy Reserve, we will be adding in ability for collateral types other than NOM. NOM holders to benefit from liquidations of collateral other than NOM through buy and burn mechanism already existent on the Onomy Exchange (ONEX). ONEX is already highly coupled to the Onomy Reserve as the source of pricing data. This addition closes the loop allowing for the same deflationationary action on NOM no matter which collateral is used to mint Denoms.

1 Like