Introducing Oxygen (O2): The Innovative RWA Liquidity Layer Powering Ozean’s Growth

Ozean, the blockchain for Real-World Assets (RWA) yield being launched by Clearpool, is unlocking the power of DeFi for Real-World Assets (RWAs) by seamlessly integrating them in a compliant and user-friendly manner, enabling users to earn native yield on-chain automatically. One of the central features propelling Ozean’s growth is the Oxygen (O2) RWA Liquidity Layer. This sophisticated liquidity mechanism is designed to supply the necessary liquidity to fuel the expansion of the Ozean ecosystem. In this article, we’ll dive into the structure of Oxygen and its crucial role in Ozean’s dynamic growth and scalability.

What is Oxygen (O2)?

Oxygen (O2) is a next-generation liquidity layer built specifically for the Ozean chain. As the backbone of Ozean’s liquidity architecture, O2 combines RWAs, tokenized treasuries, liquid crypto assets, and yield-bearing tokens into a unified basket. This basket supports key functionalities like swaps, lending, and collateralization, forming a robust liquidity pool that underpins the Ozean ecosystem.

The Problem Oxygen Solves

The initial liquidity generation for new decentralized applications (dApps) like Perp Dexes and Lending Protocols is often costly. These platforms usually allocate significant token incentives to attract liquidity, creating high entry barriers. This slows the adoption of new DeFi projects and burdens builders with high costs.

The Oxygen Solution

Oxygen addresses this issue by offering an innovative liquidity solution, integrating tokenized treasuries, RWAs, and liquid cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) into a liquidity layer. This enables new projects to access liquidity with lower costs and fewer token incentives, fostering more efficient growth and participation in the market.

Value Drivers of the Oxygen Pool

The pool’s value is derived from multiple sources:

• An index of tokenized treasures, RWAs, and major cryptocurrencies
• Yield generated from staked assets like StETH and StCPOOL
• Fees from trading activity, collateral provision, and other operations

Oxygen’s Rebalancing Mechanism

One of Oxygen’s key features is its dynamic rebalancing mechanism, which ensures the liquidity pool’s assets remain aligned with target allocations. This mechanism promotes stability, optimizes resource distribution, and enhances resilience to market shifts.

The weights will be maintained by the market through incentivising mints/redemptions for underweight/overweight constituents (lower/negative fees) or disincentivizing mints/redemptions for overweight/underweight constituents (higher fees).

For instance, if ETH is overweight in the index, fees for increasing ETH will be high, while fees for reducing it will be low.

Pricing Model

The pool’s virtual price is determined by the sum of all O2 assets (in USD) based on Oracle price feeds, divided by the total circulating O2. When minting caps are reached, the market price may assign a premium over the virtual price.

Users can mint or redeem (burn) O2 at the virtual price, calculated from reliable Oracle data. If the market price falls below the virtual price, O2 tokens will be redeemed (burned) at the virtual price instead of being sold at the market price.

Other Key Features of Oxygen

Unified Basket of Assets

Oxygen pools a diverse range of assets, including tokenized treasuries, crypto majors (BTC, ETH, SOL), and yield-bearing tokens. This provides the flexibility for users to engage in swaps, lending, and collateralization seamlessly across the Ozean ecosystem.

Yield Accumulation and Value Growth

Oxygen not only provides liquidity but also generates yield from assets like lending protocol tokens and tokenized treasuries. This yield is reinvested, enhancing liquidity and providing additional earning opportunities for contributors.

Collateralization and Leverage

Oxygen supports collateralized lending and allows users to leverage their O2 holdings. By using O2 as collateral, users can maximize their assets’ efficiency, unlocking capital for additional yield or transactions.

Stablecoin Issuance Backed by RWAs

One of Oxygen’s most innovative features is stablecoin issuance backed by RWAs. This enables Ozean to offer stable, asset-backed tokens, attracting institutional participation and ensuring stability through real-world value.

Oxygen’s Role in Driving Ozean’s Growth

Oxygen’s multifaceted liquidity layer is essential to Ozean’s expansion. It boosts liquidity, enhances financial flexibility, and supports a wide range of use cases, from trading to lending and stablecoin issuance.

1. Boosting Liquidity for Financial Flexibility

With a diversified asset pool and regular rebalancing, Oxygen ensures there is ample liquidity to meet user demand across trading, lending, and collateralization activities on Ozean. This flexibility attracts a broad range of users, from retail participants to institutional investors.

2. Supporting a Thriving Lending Market

Oxygen empowers lending protocols on Ozean by allowing users to borrow and lend against a wide variety of assets, including RWAs and yield-bearing tokens. This creates capital efficiency across the ecosystem.

3. Stablecoin Issuance to Drive Adoption

By integrating RWAs, Oxygen enables the issuance of stablecoins backed by tangible assets, such as tokenized treasuries. These stablecoins create confidence in volatile markets, driving user adoption and participation.

4. Earning Potential Through Staking and Leverage

Users can stake O2 to earn fees and leverage their holdings for additional capital. These opportunities incentivize platform engagement, creating a self-sustaining ecosystem that continually attracts liquidity and growth.

Ecosystem Benefits

Oxygen provides substantial benefits for both contributors and builders within the Ozean ecosystem.

Benefits for Contributors:

• Diversified exposure to high-liquidity crypto assets (BTC, ETH, SOL), treasury yields, and yield boosters.
• Accrual of Ozean points for future rewards.
• The majority of fees generated are returned to liquidity pool contributors.
• Access to passive, fee-free portfolio management.

Benefits for Builders:

• Off-the-shelf liquidity without the need for large native token allocations.
• Diversified liquidity that appeals to users who prefer low exposure to new tokens.

TL;DR

Oxygen (O2) is a next-generation liquidity layer that underpins the growth of the Ozean chain. It combines RWAs, major cryptocurrencies, and yield-bearing tokens into a unified asset basket, supporting critical functionalities like swaps, lending, and collateralization. Oxygen also generates yield, supports stablecoin issuance, and enables collateralization, offering earning potential for contributors while fostering liquidity and flexibility for builders.

As Ozean evolves, oxygen will remain a core component of its success, driving liquidity, financial flexibility, and sustainable growth as it unlocks the power of DeFi for RWAs. Stay tuned for updates on the initial pool assets and their weightings!