How Does Origin Ether Work?

OETH: yield-bearing LST backed by diversified ETH staking strategies

Users deposit ETH/WETH/LSTs and receive OETH, which automatically accrues staking yield. Launched May 2023 with 95% code forked from OUSD. Backed by stETH, rETH, frxETH, and native validator staking.

Algorithmic Market Operations: protocol-owned Curve liquidity via pre-minted OETH

OETH AMO pre-mints OETH and deploys it as liquidity in Curve pools. Since the protocol owns this liquidity, OETH becomes 100% backed when users swap in. This earns up to 2x rewards on the same capital but creates synthetic supply.

ARM (Automated Redemption Manager): lossless 1:1 WETH exchange

First LST to offer guaranteed 1:1 exchange to WETH with no slippage or price impact. ARM maintains reserves for instant redemption, eliminating the need to trade on secondary markets.

Direct Beacon Chain balance verification via Merkle proofs

Replaced third-party oracle reliance with on-chain Merkle Proof validation of Beacon Chain balances. Validator accounting is fully transparent and tamper-resistant through cryptographic proofs from Ethereum's consensus layer.

OGN governance token with xOGN staking for revenue share

OGN is the governance and value-accrual token. Users stake OGN for xOGN to earn a share of protocol revenue across all Origin products (OETH, OUSD, etc.).

Diversified backing across multiple LSTs and native staking

OETH is backed by a mix of stETH (Lido), rETH (Rocket Pool), frxETH (Frax), and native ETH staking. Diversification reduces single-protocol dependency but introduces compounded risk.

Pre-minted OETH in Curve pools represents unbacked tokens until users swap in. During a bank run, the pool could become imbalanced with excess unbacked OETH, creating apparent depeg even if underlying backing is sound.

A depeg or exploit in any backing LST (stETH, rETH, frxETH) directly impairs OETH's backing. The diversification reduces but doesn't eliminate single-point-of-failure risk — a systemic LST event affects all simultaneously.

If ARM reserves are exhausted during high redemption demand, users fall back to Curve where the AMO's pre-minted tokens may create unfavorable exchange rates, undermining the 1:1 peg promise.

OGN governance controls allocation strategy across LSTs and yield strategies. A governance attack could redirect backing into riskier strategies or drain protocol-owned liquidity.