Add wOETH Market on Ethereum

General

Summary

We would like to propose on addition of a wOETH market to Compound V3 on Ethereum Mainnet.

Token Asset Name

Wrapped OETH (wOETH)

Description of the project and the token

Origin Protocol was founded by Web3 veterans Josh Fraser and Matthew Liu in 2017 and is one of the most venerable projects in the space. Josh and Matthew are joined by the fully doxxed Origin team and community, which includes hundreds of thousands of members and open-source contributors. Origin has raised $38.1M from top investors including Pantera, Spartan Group, Foundation Capital, BlockTower Capital, Steve Chen, Garry Tan, and Alexis Ohanian, and currently maintains a multimillion dollar treasury. In 2020 Origin launched the Origin Dollar, a yield-generating stablecoin that reached a TVL of $300m in 2022. Origin Ether is Origin’s first and latest LST.

Origin Ether (OETH) was launched in May 2023 and is an ERC20 that generates yield while sitting in your wallet. Similar to stETH, OETH yield is paid out daily and automatically (sometimes multiple times per day) through a positive rebase in the form of additional OETH, proportional to the amount of OETH held.

Until a recent proposal, OETH was an LST aggregator that earned yield by tapping into blue-chip protocols while being collateralized by other LSTs. Over the next few weeks, OETH LST collateral will be divested back to ETH, as OETH will be transitioned into a full-fledged LST. OETH will soon become a superior LST with an extremely tight peg (1:1 redemptions to ETH thru Origin’s ARM) and high yields thanks to DVT direct staking through SSV/P2p.

wOETH is a ERC-4626 tokenized vault designed to accrue yield in price rather than in quantity. When you wrap OETH, you get back a fixed number of wOETH tokens. This number will not go up - you will have the same number of wOETH tokens tomorrow as you have today. However, the number of OETH tokens that you can unwrap to will go up over time, as wOETH earns yield at the same rate as standard OETH. The wOETH to OETH exchange rate can be read from the contract (function number 16), or via the OETH dapp.

Current exchange rate as of 6/18/24: 1 wOETH = 1.09374807 OETH

Origin has managed to integrate OETH and wOETH to a range of verticals across Defi, including vaults, restaking, and money markets :

Eigenlayer - Eigenlayer
Pendle - Pendle
Morpho - Morpho
Silo - Silo

Benefits to Compound Community

Since 2021, Origin has streamed millions of dollars in stablecoin to Compound markets via OUSD strategies, generating millions in yield and significantly boosting Compound’s TVL. This new OETH market would lead to additional increased TVL for Compound, additional revenue to the Compound Protocol and DAO from active loans and liquidations, and will attract a wider user base.

We’ve noticed many LSTs trade below their peg due to DEX fees and slippage, and to reflect the time value of money. LSTs that consistently trade below peg effectively impose a hidden exit fee - certain LSTs often trade ~0.25% below peg, meaning it takes three weeks of staking to break even. This may be ok for long-term holders, but is terrible for users who plan to loop LTSs for additional yield. This will not be the case with OETH.

Using OETH on Compound will produce higher yield than other top LSTs and have a near perfect ETH peg. OETH ARM mechanics and gas optimizations will ensure the best possible prices for traders looking for instant exit liquidity, while DVT staking will achieve greater risk-adjusted yield. Our vision for OETH is for it to become the most trusted LST for those seeking to use an LST for leveraged staking.

Resources (Website, Social Media Links and docs)

Docs: https://docs.originprotocol.com/
Twitter : x.com
Twitter Intern: x.com
Telegram: Telegram: Contact @originprotocol
Discord: Origin Protocol
Blog: Origin Protocol | Blog
Github: Origin Protocol · GitHub

The proposal author their contact info

Email: peter@originprotocol.com
Discord: @slagathorthemammothking
Telegram: @Pgee13

The relationship between the author of the new market proposal and the token

Peter is part of the Origin Protocol core team. This proposal was written using the Compound & OpenZeppelin listing checklists.

Social channels Metrics

Here are Origin’s community stats:

Twitter - 175.7k followers
Discord - 43.4k members
Telegram - 24.01k members
Facebook - 28k likes, 30k followers
Reddit - 8.5k members
Youtube - 4.09k subscribers
Github - 132 people, 69 public repositories

Market Risk Assessment

Market Cap of the token

$117.99m (34.58k ETH)

Minimum and maximum market cap of the token within the last 6 months.

Min: $75.8m

Max: $180.5

The largest exchanges where the token is listed and its respective liquidity

OETH is listed on the following DEXs:

Curve OETH/ETH ($43.5m): Curve.fi
Uniswap OETH/ETH ($881.7k): Uniswap
Curve OETH/frxETH ($251.7k): Curve.fi
Maverick OETH/ETH ($177.08k): Maverick

1inch has routing enabled for wOETH > ETH and ETH > wOETH using these DEXs, as well as using the 4626 contract when applicable.

The largest smart contracts balances of tokens and what those contracts do.

0xa4c637e0f704745d182e4d38cab7e7485321d059 - This is the EigenLayer deposit contract, 14532.85 OETH

0x94b17476a93b3262d87b9a326965d1e91f9c13e7 - This is the Curve pool contract, 7847.48 OETH

0xdcee70654261af21c44c093c300ed3bb97b78192 - This is the wOETH contract, 2693.61 OETH

Provide the volatility of the token.

Since OETH is pegged 1:1 to ETH, OETH volatility is directly related to ETH’s volatility.

Daily Volume: $1-4m

Total supply

The current supply of OETH is 34,581 OETH (34,581 ETH), or $117.99m at current prices. Analytics for OETH are always available on-chain via the Analytics Page.

Emission schedule.

There is no set emission schedule for OETH. Similar to stETH, OETH is minted on demand when users deposit ETH into the protocol, and burned on demand when users exit OETH for the collateral.

Decentralization

How is this asset distributed amongst token holders? List the top 10 holders, the percentage of each holder, and tag any of them if they are known.*

Largest OETH holders: holders

OETH can be minted by anyone using ETH via the OETH dapp

List all of the privileged roles in the token contract. This can include whitelisted EOAs, Multi-sigs or DAOs.

Certain functions can be called by Origin Guardians - these can all be found in the governance section of the OETH docs

Is it pausable?

The OETH contract can be paused by Guardians to handle security threats and crisis management.

Does it have a blacklist or whitelist?

There is no blacklist or whitelist, however the OETH dapp is unavailable to people in the USA, and certain sanctioned countries.

Smart contract risks

Codebase & On-chain Activity:

Provide a Github repository for the underlying token contracts

Provide a test suite with code coverage.

Provide Etherscan links with verified contracts

Give the age of the token in days

As of 6/18/24, OETH is 427 days old

Given the number of transactions in the contract to date

To date there are 11,390 total transfers

Security Posture:

What audits, if any, were performed? Provide links to the reports if they exist.

OETH was built reusing 95% of the OUSD code, of which 10+ audits have been done since 2020. Not that long ago, OUSD reached a market cap of $300m without breaking, and without diminishing the APY it was capable of generating. All OETH audits can be found in the audits section of the OETH docs. OpenZeppelin is also held on retainer to review 100% of the OETH and OUSD smart contract changes.

Does the project have an active bug bounty program?

Yes, Origin maintains an active bug bounty. The rewards range in size from $100 OUSD for minor issues to $1,000,000 OUSD for major critical vulnerabilities. The bug bounty program is currently administered by Immunefi.

Provide emergency contacts with their responsiveness levels and response availabilities

The Origin team is available 24 hours a day via Discord. On March 10 2023 when USDC depegged from the dollar (and therefore from OUSD), it took the Guardians/Origin engineers about 4 minutes to notice, and 16 minutes to start the process of moving the funds to a safer strategy. OETH and wOETH will have no exposure to stablecoins nor any other pegged asset aside from WETH.

List additional security and formal verification tools used in development

We mostly manually verify deployments before the multisig tx is created. We use Sol2uml to verify deployed contracts. We also have Slither as part of our CI. We also have some scripts in our repo that we use as needed.

List all monitoring services used by the token, if any.

We use an in-house solution based on Subsquid as our indexer and Grafana. We also add custom alerts on Tenderly for critical events.

Multi-Chain Strategy

Will the token include implementations on other networks?

wOETH is currently available on mainnet and Arbitrum. There are plans to roll out wOETH on Base in the near future.

If so, will the tokens be natively minted on the other networks or bridged across?

The tokens are bridged using Chainlink CCIP.

Are there any mitigations in the contracts in case a bridge becomes inoperable or compromised?

CCIP has cursed state if the bridge is compromised. We check that state before we do any cross chain op. CCIP also has defined cross-chain transfer limits.

Token contract Behavior:

Does the token have more than one address?

There is only one OETH contract and one wOETH contract. The full OETH contract registry can be seen in the OETH docs.

Does the token use a compiler version greater than 0.8.0 or the SafeMath? If not, explain how the protocol deals with possible overflows and underflows

Yes, we are currently compiling with Solidity 0.8.7. There are still some parts of the code that still use SafeMath from before the upgrade to Solidity 0.8.x

During the execution of the token’s functions, does the token execute external code chosen by the caller or receiver? If so, please explain the reasoning behind this decision

No, the OETH token does not allow code chosen by the caller or receiver to be executed. Specifically, we don’t support ERC-777.

How does the token contract deviate from a standard implementation of ERC20? Any additional features that the Compound DAO should know about?

The main feature to be aware of is OETH is a rebasing token. That is, the token holder’s balance increases as yield is generated. By default, OETH does not rebase if the token holder is a smart contract. If a contract can support rebasing, there is a governance process to opt the contract into rebasing.

wOETH earns yield via price appreciation, but does not rebase.

Is it burnable?

OETH is burnable on redemption for ETH upon withdrawal.

Does the token contract have a fallback function? If so, when does it revert?

OETH is proxied which has a fallback function. This just does the delegate call to the implementation contract. The implementation contract does not have a fallback or receive function.

Does it have a fixed supply? If no, who can mint?

OETH supply is not fixed, it can be minted by anyone using ETH via the OETH dapp. However, the OETH dapp is unavailable to people in the USA, and other sanctioned countries.

Is it a rebasing token?

OETH is a rebasing token, but wOETH is not.

Does the token charge fees on transfers?

There are no fees charged on transfers.

Does it implement any transfer hooks? Or hooks on any method?

No

Is the contract performing arbitrary delegate calls? If the answer is yes, indicate who can make these calls and to what contracts

The proxy contract delegates to the implementation contract. No other delegates are used in the OETH token

Is it flash mintable? If yes, please provide more information on this feature

No

Is it flash loanable? If yes, please indicate who offers the service.

OETH is flash swappable since we are in Uniswap pools which effectively means its flash loanable, but Origin does not offer a flashloan service for OETH. Other 3rd party platforms may provide this service.

What are the typical gas costs for calling each of the standard ERC20 functions?

Typical gas costs are $1-5 at current ETH prices.

Price Feed Behavior

Is the price feed supported by ChainLink?

Yes, the price feed for OETH is supported by ChainLink across Mainnet, Arbitrum and Base. OETH price feeds are also available via alternative oracle providers Tellor and Dia Data.

How often will price updates be posted?

The OETH/ETH feed has a 24h heartbeat

At what price difference threshold will price updates be posted?

The OETH/ETH feed is at a 0.5% deviation threshold

Upgradability:

Is it upgradeable? If so:

Yes, OETH is upgradable

Who is authorized to make an upgrade?

We have a timelock contract with a 48 hour delay. This is controlled by a Governance contract that uses xOGN.

Which components are upgradable?

The whole token contract can be upgraded.

How does the upgradeability design work? Who manages it and how are upgrades performed?

All OETH contracts are owned by the Timelock contract. All upgrades will have to go through Timelock. Only governance can queue/execute transactions on the Timelock, meaning the community has to vote for every on-chain proposal including upgrades to contracts.

Does it emit an event when the implementation is updated?

Yes, it emits event Upgraded(address indexed implementation);

Next Steps

Origin invites the Compound community to consider this application for listing the wOETH market and welcomes any suggestions in this direction. Origin also looks forward to the community to suggest:

  • Collateral Factor
  • Liquidation Factor
  • Liquidation Penalty
  • Supply Cap
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As of yesterday morning (7/15/24), OETH no longer has exposure to other LSTs, as all OETH collateral LSTs have been divested back to ETH. That ETH will very soon be staked natively through SSV/P2p, so OETH can now be officially considered an LST. An additional OpenZeppelin audit for this new, true-LST version of OETH has also been completed and added to the audits section of the OETH docs.

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