Why we invested in Oxygen

  • On-chain prime-brokerage at fast transaction speeds and low cost.
  • Multiple-use of same collateral and lower liquidation risk.
  • Market-based pricing for fair borrow / lending terms set by users
  • In-pool trading for streamlined leveraged trading via DEXs.
  • Support for tokens, synthetic products, non-linear assets, other assets -> all cross margined in the same account.
  • The crucial first step to transform the current model of finance to make it more accessible and fair.

Introduction

We at Sino believe that blockchain is the greatest innovation in technology since the internet, and DeFi has the potential to be it’s killer use case. However, for DeFi to truly become a legitimate alternative to traditional finance (TradFi), there should be minimal sacrifice in quality in lieu of the benefits of decentralization. Up until recently, the porting of traditional finance functions onto decentralized chains has encountered some issues, chiefly; speed, trustworthiness, ability to handle large order executions and complexity of products available to users. We believe that many of these issues have been addressed in some clever protocol designs on top of Ethereum, necessitated by its current inherent limitations. With the onset of Solana and the Serum ecosystem, we believe that the infrastructure is finally in place to create a new, fairer, and more accessible alternative to the TradFi system.

Evolving DeFi technology brings more and more TradFi services to crypto

What is prime brokerage?

Traditional prime brokerage refers to a suite of specialized services offered to large investors like hedge funds that, given the size of their trades and investments, could not be offered by a standard brokerage. Services include:

  • Securities lending
  • Custodial services
  • Leveraged trade execution
  • Cash management
  • Structured products
  • Synthetic products (e.g. swaps + others)
  • Direct market access

Overview of Oxygen

Oxygen is a DeFi Prime Brokerage Protocol allowing users access to some of the prime brokerage services previously reserved for large global investment funds. Holders of digital assets can use the Oxygen protocol to generate liquidity, earn yield, borrow assets to go short, and get trading leverage against a portfolio of assets. Oxygen aims to provide services that cater to the needs of DeFi applications, individual users as well as institutions.

Users can create pools
Here we added USDC and SRM to a pool
Confirm how much we want to add. Gives users more flexibility. We will add 100% of both.
Use the mobile app to continue.
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  • Allows the borrowing of one portfolio against another. This reduces margin call risk and leads to greater portfolio stability.
  • Can use all assets in a portfolio as collateral, lower liquidation risk when borrowing.
  • Can lend directly from pools on their terms (maturity, yield) according to market rate or limit order.
  • Since assets lent out are guaranteed by borrowers own pool, users can maintain greater borrowing power for more capital efficiency.
  • Users can generate yield on their portfolio while borrowing other assets against that portfolio at the same time.
  • The clearing price for borrow/lending is determined by Serum’s on-chain order book matching; ensuring fair price every time. Unlike existing lending protocols, the user can set their minimum rate to lend at.
  1. Trading leverage: the provision of leverage no longer needs to be dominated by centralized exchanges. Users can increase their trading position while trading on the decentralized Serum DEX.
  2. Passive yield: Earn income on assets sitting in your wallet.
  3. Borrowing to short: Decentralized shorting of assets.
  4. Option writing: Custom products, write your own options.

Why Solana?

We recommend reading our Solana investment thesis to get an idea of why projects are choosing to build on Solana.

Ecosystem

As Oxygen leverages the Serum ecosystem, projects will integrate with or expand on the Oxygen protocol functionality to take advantage of DeFi composability.

  • MAPS.me is one of the first major applications to build on Oxygen, allowing its more than 140 million users to earn passive income on assets in their native MAPS wallet. If this feature proves to be popular with the Travel apps user base, Oxygen will bring mainstream retail liquidity to the Serum ecosystem. If this integration proves successful, it could entice a wave of Web 2.0 companies with large user bases to do the same.
  • Serum is the underlying decentralized order book matching engine that serves to connect borrowers’ and lenders’ liquidity efficiently across all of the various applications getting built around Solana, including Oxygen.
Ever growing Solana ecosystem. Source: https://twitter.com/solanians_/status/1374317108541067266

Protocol flow

1. Deposit: Users create a new pool and deposit assets to the protocol. let’s say wBTC. The oxygen protocol issues the equivalent OXY_wBTC to the pool.

Successful trade flowchart. Source: https://www.oxygen.org/docs-example.html

OXY Token Overview

Token holders control 100% of protocol net revenue.

  • Oxygen charges a fee for all matches made in its debt market.
  • The fee ranges from 7.5%-15% of the clearing rate.
  • The token holders may decide to add additional fees on trading and liquidation.
  • 1 token one vote.
  • Can vote on binding governance initiatives.
  • Token holders could vote to charge fees on trading from within pools, on liquidations, or from asset management features in the future.
  • The token holder can also decide the discount schedule for token holders.
  • Holding OXY reduces protocol fees — up to a maximum of 50%.

Risks and Threats

Lack of current liquidity

Conclusion

Oxygen offers a substantial leap forward in DeFi functionality and brings DeFi closer to mass adoption through strategic B2B2c integrations. The ability to customize financial instruments to fit specific requirements will help onboard larger, more sophisticated investors, and the option to actively trade assets that serve as collateral is a huge improvement in capital efficiency. Beyond innovative functionality; Oxygen’s integration with Maps.me’s 140M+ users will serve as a boon for retail DeFi on-boarding. These advantages position Oxygen as a key building block in the emerging DeFi Ecosystem.

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Sino Global Capital

Sino Global Capital

A team of former consulting, Wall Street, private equity, government, and corporate veterans accelerating the blockchain revolution