Onomy’s Cryptographic Index (ONI - Onomy Index)
1. Objective of the Onomy Index (ONI):
The ONI Index aims to offer a diversified financial product that allows users to invest in a portfolio of assets within the Onomy ecosystem and the broader interoperable Cosmos applications. Similar to Jupiter’s JLP, this index would be backed by assets deposited in liquidity pools, ensuring tangible backing and utility within the protocol.
2. ONI Index: Low, Medium, and High Risk
To accommodate different risk profiles, Onomy will introduce three index:
ONI-Low Risk
NOM: The native Onomy token.
Denom Stablecoins: Stablecoins backed by Onomy’s DEX system (ORES).
Assets: BTC and ETH.
This index provides stability, leveraging BTC and ETH as blue-chip assets alongside stablecoins to reduce volatility.
ONI-Medium Risk
NOM: The native Onomy token.
Denom Stablecoins: Stablecoins backed by Onomy’s DEX system.
Assets: A mix of BTC, ETH, and selected high-market-cap Cosmos ecosystem assets (e.g., ATOM, OSMO, AKT).
This index introduces more exposure to the Cosmos ecosystem, balancing growth potential with relatively stable assets.
ONI-High Risk
NOM: The native Onomy token.
Denom Stablecoins: A smaller allocation of stablecoins for some stability.
Assets: A combination of NOM, mid-to-low cap Cosmos ecosystem tokens (e.g., JUNO, SCRT, EVMOS) and potential emerging DeFi tokens.
This index maximizes potential returns but comes with higher volatility and risk exposure.
3. Benefits of the ONI Index:
Diversification: Risk reduction through a balanced portfolio.
Real Backing: Each ONI token will be backed 1:1 by real assets in Onomy DEX liquidity pools.
Yield Generation: Assets within the index will automatically participate in yield farming, liquid staking, or transaction fees.
Accessibility: A simple way to invest in the Onomy ecosystem without managing individual assets.
4. Technical Components:
ONI Tokens: Each index (Low, Medium, High) represents the combined assets within its respective category.
Rebalancing Module:
It will recalculate the asset proportions in the index based on market capitalization, transaction volume, or custom parameters.
Backing and Liquidity:
Assets will be deposited in liquidity pools on Onomy DEX.
Interoperability with IBC assets to facilitate seamless transactions.
Yield Generation:
Assets in the index will be utilized for liquid staking and DeFi strategies to maximize returns.
Transaction Fees:
When creating or selling ONI, users must pay a percentage fee.
A portion of this fee will go to NOM stakers or liquidity providers.
Another small portion will be used to buy and burn NOM, reducing supply and enhancing its value.
5. ONI as a Liquidity Fund:
ONI is a liquidity fund that acts as a counterparty to traders. When traders wish to open leveraged positions, they borrow tokens from the pool.
ONI Token Value Proposition:
The ONI token derives its value from:
Trader PnL (Profit and Loss): The fund gains when traders incur losses and vice versa.
Fee Distribution (75% of generated fees):
Opening and closing trading positions
Price impact fees
Borrowing fees
Transaction fees within the pool
APY Calculation: The annual percentage yield (APY), denominated in USD, is calculated based on 75% of transaction-generated fees. This does not include asset appreciation or traders’ PnL.
Fee Redistribution: Fees collected are redistributed to ONI token holders via hourly rebases within the liquidity pool.
6. Proposed Implementation:
Phase 1:
Launch the ONI-Low Risk index with an initial combination of assets: BTC (45%), Denom stablecoins (30%), ETH (10%), and NOM (15%).
Phase 2:
Introduce the ONI-Medium Risk index with additional Cosmos assets.
Phase 3:
Launch the ONI-High Risk index, including emerging ecosystem tokens and high-growth assets.
Phase 4:
Expand ONI’s functionalities, potentially including additional DeFi integrations and lending mechanisms.
7. Additional Use Case:
Users can use ONI as collateral in DeFi protocols that offer lending or leveraged strategies.
8. Benefits for Onomy:
Increased TVL (Total Value Locked): More assets locked within Onomy DEX.
User Retention: Attracts users interested in simplified investment strategies.
Competitive Positioning: Differentiates Onomy as an innovative leader within the Cosmos ecosystem.
9. Next Steps:
ONI Smart Contract Development: Create the token and test rebalancing functions.
Community Consultation: Engage with the Onomy community to define the index composition.
Security Audits: Ensure the security of smart contracts.
Initial Launch: Introduce ONI with an incentive program to encourage adoption.