Oikos is a derivatives trading dApp currently deployed on the BSC network. Oikos offers synthetic asset issuance and exposure to cryptocurrencies, indices and commodities. It is a multi-token system, which consists of the Oikos network token (OKS) and various synths (oUSD, oBNB, oETH, oBTC), which track the real-world performance of their underlying assets.
The main goal of the project is to keep the stock market going and maintain the decentralized structure through an incentive mechanism based on a combination of staking, collateral, fees and inflation. Basically, it allows anyone to create synthetic assets that can follow the price of its real-world counterpart. This can be done by locking the platform’s native asset OKS into the protocol.
How OKS Supports Synths
All Synths are supported by OKS tokens. Synths will not be staked until OKS holders pledge their OKS as collateral using Minter, a decentralized application for interacting with the Oikos contracts. Synths are currently supported by a collateralisation ratio of 500%, although this could be increased or decreased in the future through community governance mechanisms. OKS strikers incur debt when they strike Synths, and to exit the system (ie unlock their OKS) they must repay this debt by burning Synths.
Oikos is also currently testing BNB as an alternative form of collateral. This means that traders can borrow Synths against their BNB and start trading immediately, instead of having to sell their BNB. Striking BNB requires a collateralization ratio of 150% and creates a debt denominated in BNB, so BNB strikers are staking oBNB instead of oUSD and not participating in the pooled debt aspect of the system. In this model, BNB strikers do not receive any fees or rewards because they do not take any risk for the debt Pool.
Current Risks
There are several risks in the current architecture, as Oikos is still an experimental system and complex systems require both empirical observations and theoretical analysis. Empirical observation and theoretical analysis ensure that the design of the mechanism aligns the incentives for all players.
One risk involves the debt OKS holders spend when they deploy their OKS and mint Synths. As explained earlier, this debt can fluctuate as a result of exchange rate shifts within the system. This means that in order to exit the system and unlock their deployed OKS, they may need to burn more Synths than they originally staked.
Most people in the cryptocurrency space are aware of this risk, but the prices of most crypto assets are highly correlated to Bitcoin and/or Ethereum. This means that it is possible for large price swings in the OKS token to occur for reasons that have little to do with OKS or the Oikos system.
Finally, there are a number of aspects of the system that are currently centralized. This decision was taken to ensure efficient implementation of the project. An example of centralization is the use of proxy contracts in much of the architecture. This is to ensure that the system can be easily upgraded, but grants a level of control to the technical team that requires trust from users. While these aspects will be phased out over time, it is important to understand the risks inherent in the current system architecture.
Risk Mitigating Strategies
As a decentralized protocol, the Oikos team is committed to decentralization and censorship resistance – this will be a gradual process as the system matures, the path to decentralization started last year, with the integration of Chainlink data feed and Keepers, fundamental pieces of infrastructure for a truly reliable platform. Another important area is governance, with the establishment of the Achaean Council and the upcoming elections, Oikos will regularly initiate calls for community governance to ensure that the goals of the project are aligned with the community, many rewards and perks will be assigned to OGs and contributors, so don’t miss out. Another aspect of this process is a transition to a formal change management process; with the introduction of the OIPs (Oikos Improvement Proposals) and OCCPs (Oikos Configuration Change Proposals) website to enable the community to submit change requests and to ensure that any changes to the system are properly understood and considered by all stakeholders .
Future functionalities
Additional Synths
There are many different types of Synths that can be added to the system to make Oikos.Exchange more useful. These include leveraged assets not available within other platforms on Binance Smart Chain, as well as indices such as the SCEX which track a basket of centralized exchange tokens, stocks and commodities respectively.
Synthetic futures
Oikos expects to add to the platform the possibility for traders to list Synthetic futures on Oikos.Exchange in the near future. Many aspects of the functionality of this have yet to be finalized, but it is expected to use a self-balancing mechanism similar to that used for automaker algorithms, where the total open interest of each position and therefore the risk to OKS staking is capped and borrowing rates are adjusted based on the current open interest.
The system will also encourage traders to balance risk in the system by paying a percentage of the fees to traders who rebalance positions, although this feature will not be in the initial release.
There are already a number of derivatives trading platforms for crypto assets, but all of them are limited by the liquidity of the counterparty. The unique design of the Oikos system means it can potentially capture market share in this area, similar to how Binance gained market share by listing more cryptoassets than other centralized exchanges.
multi chain
As the entire industry matures, the need for composability and interoperability between protocols and blockchains becomes a more pressing issue. The compartmentalization of resources, caused by a lack of compatibility between standards, affects the ecosystem as a whole. However, not all protocols are created equal and Oikos evolves and adheres to industry rules.
In the future, Oikos will expand its presence to more EVM-compatible chains, especially targeting L2 networks. Among the options considered are Polygon and xDAI, and while the investigation is still ongoing, the team expects it to go live in Q3 2022. It is important to note that a multi-chain launch will not fragment the current debt pool or synth delivery, instead the system will coexist across different networks. Data is synchronized by decentralized oracles and a new debt-sharing mechanism. Research is being conducted into the exact migration mechanism.
Learn more about Oikos through their Medium blog to read, the website to visit, the Twitter page or by joining the Oikos community at Discord and Telegram†
