USDO
Overview
USDO or “Omnichain USD” is an over-collateralized stablecoin native to the Alto protocol, designed to maintain a programmatic alignment to the U.S. Dollar. USDO is natively omnichain through its integration of the LayerZero OFT superstandard.
USDO is designed to be resilient to market volatility through an over-collateralization buffer (90% LTV), adaptive interest rates, creation fee(s), censorship resistant collateral makeup, and its oracle design.
The USDO market liquidity depth is controlled directly by the Alto DAO, which provides the protocol control over USDO’s price peg to the U.S. Dollar.
Mint
USDO is created via CDP’s (Collateral Debt Positions) or loans within Alto’s isolated creation markets (Mint markets). Supported collaterals include decentralized gas tokens such as ETH, as well as liquid staking tokens such as Lido wstETH. These LST’s are yield bearing, which offers users the highly desirable ability to have a self repaying loan. These markets feature adaptive interest rates which fluctuate based on utilization of the debt ceiling.
USDO markets also have a dual oracle design where the more advantageous price for the protocol is always utilized, which gives USDO both stronger censorship resistance properties, and enhanced stability.
Lastly, the Alto Protocol employs partial liquidations, which are far less painful for borrowers than traditional liquidation model(s). Leverage is also available, and is done in a capital efficient manner due to Alto market’s ability to over-borrow what is normally allowed to obtain the users desired effective leverage.
Origins Markets
Origins markets are permissioned markets which enable bespoke access to customizable USDO loans.
The Alto DAO has access to the current sole permissioned market which utilizes ETH collateral only, with no interest nor liquidations, with up to a 100% LTV. The goal of this market is to establish a mechanism for the DAO to generate USDO with Protocol Owned Liquidity (POL), with the express purpose of maintaining USDO liquidity depth while the DAO accrues no debt and has no risk of liquidation.
In the future, Origins Markets will offer bespoke DAO-to-DAO CDPs.
Rewards
The ALTO protocol features in-the-money call option incentives for users who pay interest through open debt positions on the Alto protocol. For more information on Alto’s call option incentives, refer to oALTO.
Parameters
USDO Mint markets have several parameters:
Debt Ceiling: The total amount of USDO that can be created using a given collateral.
Interest Rate: Interest the borrower pays for having a loan position opened. It accrues and compounds every block.
Mint Fee: The creation fee starts at 0.5%, and only increases when USDO is below 1.00 USDC, and will linearly climb to 1% at maximum when USDO is valued at 0.98 USDC on Uniswap. Conversely, when USDO is valued at or above 1.00 USDC, the creation fee will remain 0.5%.
LTV: Mint markets will feature a maximum LTV of 90%, which means USDO is at minimum 110% over collateralized. This makes borrowing extremely capital efficient.
MCR: The Maximum Collateral Ratio or MCR is the point at which collateral will begin to be liquidated, typically above the LTV. When the user passes the MCR, the user will be brought down to the max LTV.
Max Leverage: The maximum effective leverage obtainable is dictated by the max LTV per market. No leverage ceiling is enforced external to the limitations imposed by the market's LTV.
The max leverage per market is calculated by:
(1/(1-LTV)) * 0.95
Liquidation Fee: This is the fee charged upon liquidation being triggered due to a user’s CDP going above the market’s defined LTV. This fee is defined per market as a base + liquidator speed bonus.
USDO Collateral Markets
Network Gas Tokens
ETH, ZRO, tBTC
LSTs
rETH, wstETH, pxETH
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