Orbit Finance: Synthetic Asset Protocol

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Hi everyone, I want to present Orbit Finance to your attention.

Orbit Finance is a synthetic asset protocol. Synthetic assets can be anything that there is exists a reliable oracle for: USD, EUR, inverse BTC, SP500, TSLA stock, price of oil.

Oribt Finance functions by over collaterialization. E.g. if you want to create 1 $USD of synthetic token, you must deposit 1.1 $USD worse of collateral. If the price of synthetic to collateral (provided via oracle) falls under the set ratio - the collateral gets sold of to buy back and burn the synthetic token.

See MakerDAO and Liquity for research around this model.

I am planning to create the next structure:

  • orbit contract: allows to create a single synthetic/collateral pair defined by oracle link. Each orbit contract is NEP-141 token, which represents this synthetic asset. The collateralization ratio is defined here as well. Plus few other parameters. This contract will have little to no governance (icon and description of synthetic tokens). Following ideas from Liquity, it’s important to have staked reserve of synthetic token to allow to fast react to price changes.
  • orbit-factory contract: the contract that defines which pairs are going to be created via governance. A token driven DAO make sense here to vote on which collateral / synthetic to offer and at what collateral ratio. Also this DAO can provide liquidity incentives for synthetic tokens on Ref and the reserve pools inside synthetic assets.

This raises an interesting problem. Let’s imagine we want to issue $NUSD - USD stable coin that is backed by $NEAR. On the other hand, there is also few version of staked NEAR which have very similar parameters (plus some contract risk but with additional reward). This means that synthetic USD that is collateralized with stNEAR will be a different token.

Importantly, whichever first native stable coin on NEAR will get adoption via usage - that one will be dominating going forward. But if it’s collateral based and has only single type of collateral , it has a very natural limit on how much circulating supply it can have.

I want to ask what community thinking of a separate Meta Coin. In case of dollar stable coin, instead of calling NUSD any specific stable coin, we call NUSD a Meta Coin that contains in some proportions various other stable coins from NEAR Ecosystem. Under it can use Curve-like swaps to make sure tokens are liquid and pool maintains a right proportion given potential risks of each coin.

The major downside is that this will require extra governance, as in turn will have additional risks.

The upside, is that all governance around multi-collateral moves there. Also even other synthetic or algorthimic stable coins can contribute to this Meta Coin, which in turn will allow it to have larger circulating supply and liquidity.

Thoughts?

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