BeInCrypto held an AMA with Oxygen Protocol on our public Telegram channel on March 17.
Full details on the project can be found here – https://www.oxygen.org/
This AMA has been edited for clarity
BeInCrypto: Welcome to our BeInCrypto AMA! Today we welcome Edward from Oxygen Protocol. Thanks to everyone for being here!
First of all, I think it is interesting for us to know a little more about your background so please feel free to write a short paragraph about your involvement with blockchain, cryptocurrencies and so on. By the way you can also explain your current role to us!
Edward: Thank you for this opportunity! I’m Edward and I’m the APAC Head of BD for Oxygen. Prior to Oxygen, I was in the strategy team at HKEX. I’m excited to do this AMA today with BeInCrypto! Thank you for this opportunity!
1. BeInCrypto: You’re welcome, thanks for providing such info for us. Well, let’s get to the main topic of our session then. What would you say if someone asked ‘what is Oxygen’ to you?
Edward: Oxygen Protocol is an on-chain prime brokerage, built on the fast-growing and liquid Serum ecosystem and running on Solana’s scalable blockchain. Oxygen is also planned to integrate with Maps.me 2.0, which is bringing the benefits of DeFi to its 140 million registered users globally. We are targeting DeFi users all around the world and are running a number of marketing and promotional campaigns across multiple regions to spread awareness of what we’re bringing.
The first phase of Oxygen is a borrow-lending via a pools-based infrastructure. We next plan to create volatility trading agreements and structured product functions, so that developers can create their own structured products for themselves and their clients. Our ultimate vision is to recreate marketplace-esque business units which exist within investment banks and make them accessible to everyone.
2. BeInCrypto: Awesome! In fact, you need to count on a qualified team in order to smoothly run the project. Could you please tell us a little bit more about the team who’s behind Oxygen?
Edward: The Oxygen team is made up of people who are passionate about building the financial infrastructure of the future. They collectively have over decades of fintech experience.
Alex Grebnev has over 16 years of investment banking experience, including in Goldman Sachs and Merrill Lynch, where he was the Managing Director of the structured products group. Viktor is a serial technology entrepreneur and has worked as CIO for a number of large companies. Sam Bankman-Fried, the founder and CEO of Alameda Research and FTX, is a strategic advisor to the project.
3. BeInCrypto: That’s great! It’s easy to manage everything when you have such professionals taking care of all the tasks. However, there’s a motivation behind every single new plan so what motivated you all to create Oxygen?
Edward: Oxygen is a crucial first step towards fulfilling a larger ambition shared by DeFi projects like Serum. We share this ambition to transform our current model of finance into one that is more accessible, fair and powerful than once imaginable.
Our team has invested a lot of personal time and capital into Oxygen and we have amazing partners on board to help realize our vision.
4. BeInCrypto: It sounds good! It’s really useful knowing the reasons that made you come up with this idea, it’s a brilliant one. Now we can learn more about some specific characteristics. So, when it comes to Oxygen’s strengths, what is the project seeking to do, and what are the protocol’s major features and advantages?
Edward: So as mentioned, Oxygen’s first phase is borrow-lending, with some special key features. Oxygen will match borrowers and lenders through Serum DEX’s on-chain order book, so borrowing and lending rates are more accurate and fair (market based).
Capital efficiency is another important focus. Oxygen allows for multiple use of the same collateral, so users can generate yield on their portfolio while borrowing assets at the same time. Users can also utilize all of their portfolio across multiple asset types as collateral to borrow, and this should create a lower liquidation level or liquidation risk.
Furthermore, since Oxygen allows users to interact with the Serum ecosystem and DEX directly from their pools, a streamlined trading process is made possible, which may interest people who want to do things like leveraged trading. And because Oxygen uses an on-chain risk management engine to evaluate each user’s pool, it is built to support synthetic products and non-linear assets.
Oxygen will also be seeded with the 140M registered users from Maps.me’s user base who will generate yield from their embedded wallets. This will jump start Oxygen as one of the largest fintech applications. We have other liquidity provisions in place too, including support from Alameda and leading HFT firms.
Also worth mentioning is that after the borrow lending phase of Oxygen, we may next plan to create an OTC volatility desk and structured product functions, so that developers can create their own structured products. After all, our aim is to recreate the business units traditionally found in investment banks and to make them accessible to all.
5. BeInCrypto: Ok, got it. It looks impressive. By the way Oxygen wants to fit a niche and solve several issues. So it’s time for us to know what opportunities did you recognize in the marketplace and the cryptocurrency ecosystem?
Edward: There are certain features lacking in the current borrow-lending marketplace: borrow/lending rates are often based on pre-set market models as opposed to an accurate (and fair) market rate.
Secondly, DeFi users’ capital is not as efficient as it could be: users cannot borrow against the collateral that they lend, for example. True leveraged trading through streamlined access from a pool to DEX is currently not a universal solution either.
Lastly, DeFi is slow in transaction speed (due to legacy issues of blockchains like Ethereum) and the current DeFi userbase is small.
Let’s take a bit of a closer look at Oxygen’s borrow-lending phase. There are several key features that distinguish Oxygen from current competitors and address these issues.
Oxygen is built around a pools-based infrastructure, wherein users can create a pool by depositing their assets and marking which ones to lend. Users then set the lending parameters, including desired maturity and yield, whether as a market order or limit order. Users can do this because the clearing price for Oxygen’s borrow-lending is market-based. Oxygen will match borrowers and lenders through Serum DEX’s on-chain order book instead of through a pre-set, manually adjusted market model. Users thereby get a fair price for borrowing/lending.
And on the capital efficiency front, Oxygen allows for multiple use of the same collateral (so as mentioned, users can generate yield on their portfolio while borrowing other assets at the same time). Furthermore, users can utilize all of their portfolio across multiple asset types as collateral when borrowing, helping to manage their risk.
Then there is Oxygen’s in-pool trading feature, so users can interact with the Serum ecosystem and DEX directly from their pools, leading to a streamlined trading process which we hope other players in the Oxygen ecosystem will build on. The same can be said for Oxygen’s on-chain risk management engine to evaluate each user’s pool, which supports tokens, synthetic products, non-linear assets, and more.
Oxygen is also built on Solana blockchain, which can support over 50,000 TPS, with block times of 400ms and transaction costs of approx. $0.00001, meaning Oxygen has scalability as a completely on-chain P2P borrow-lending and prime brokerage protocol. (Check out https://solana.com for more)
6. BeInCrypto: Wow, you really know what you have been doing in the crypto space. That’s amazing the way Oxygen addresses these topics! However, all the projects are supposed to deal with some problems now and then. What difficulties or challenges do you foresee for your strategy and for Oxygen?
Edward: One challenge lies in our choice of a new and promising ecosystem, namely the ecosystems of Solana, the fastest blockchain, and Serum, the decentralized ecosystem built on top of Solana. Some argue that Solana and Serum are less mature compared with Ethereum at this stage; but Ethereum was once a newcomer and had to prove itself. And even today, the teams at Serum and Solana have demonstrated their abilities to overcome the challenges that come with continual pioneering in this space.
That being said, we will need to work with Serum and Solana to get more people to develop and build on these ecosystems. We are finalizing details on a wide variety of incentives programs to continue attracting developers to build on the Oxygen protocol. We launched our alpha UI to allow users to create and invest via their own pools (https://app.oxygen.org). And, as is natural in DeFi, we expect the Oxygen community to develop UI interfaces that will end up becoming the primary interface to Oxygen Protocol, and becoming new points of engagement with worldwide users.
7. BeInCrypto: That’s great to know because you have already thought about all the possible solutions to solve such drawbacks – it was amazing to learn more about your thoughts on this topic. Switching gears, we could present OXY token to our community. Can you tell us what crypto wallets will support the OXY token as well as some more info about the token itself?
Edward: One of the great things about DeFi is that the tokens can be stored in any wallet that supports SPL or ERC-20 tokens. Sollet.io and Solflare are two popular wallets that support SPL tokens, and of course, Metamask is a staple choice for Ethereum based ERC-20 tokens which will support wrapped versions of OXY token for use on Ethereum.
As for OXY token (https://oxygen.org/token.html), OXY is a utility and governance token that powers the ecosystem and will allow users to benefit from 100% of the net revenues generated from Oxygen Protocol. Each token represents one vote, and token holders can vote on binding governance initiatives related to Oxygen.
This includes issues like economics and fees of the protocol, decisions on what assets are available on the platform for lending and borrowing, and even changes to the risk management, liquidation, data sources and other governance properties.
That’s the short version!
8. BeInCrypto: I bet our community is already excited to get some OXY tokens by this moment! I suppose there is some more great upcoming news regarding your roadmap and plans for 2021. What does the roadmap for the near future look like?
Edward: In terms of roadmap, we have recently finished our first strategic action phase, including the launch of our alpha version (https://app.oxygen.org) and our Oxygen wallet (on iOS with plans to release Android soon too). We have also, in our second phase, brought onboard our various strategic DeFi ecosystem partners, including Alameda Research, Serum, FTX, leading HFT players, Genesis Capital, CMS, Multicoin, and many others who are investors and sophisticated liquidity providers.
In our next phase, currently in-progress, we will list OXY on multiple, major platforms and launch our beta app, where users can experience in-pool trading, multiple use of the same collateral, and market-based pricing. We will also target, in this same period, integrating DeFi yield into the Maps.me wallet, provided certain regulatory requirements and availability of partner services on Solana and Serum are also where they need to be.
Throughout these phases, we intend to build out and implement governance programs to create a seamless, enjoyable experience throughout all upcoming integrated services; design choices should be driven by what makes practical sense.
9. BeInCrypto: That’s a promising roadmap, for sure! OXY tokens will surely have a successful path ahead but we all know that Tokenomics play a vital role in basically every single project. This wouldn’t be different in your case. Could you please tell us a little bit more about the sources of revenue at Oxygen?
Edward: As we know, users can become lenders by depositing their assets and marking out which assets they want to lend out. They will also be able to control the terms at which they lend their assets, including maturity and desired rate, as well as whether they want a limit order or market order.
Oxygen may charge fees based on trading volume, or a fraction of the yield earned by lenders. All of these fees will be governed by OXY token holders, and ownership of OXY tokens also reduces the protocol fees. So as the community continues to build on Oxygen to allow for more and more sophisticated capabilities, the benefits from holding OXY tokens will be enhanced accordingly. We look forward to building an empowered and long-term community through all these benefits that OXY tokens bring.
Here’s an illustrative example (just an example!): Protocol charges % success fee from the yield earned by the lender of the asset, and % from the market clearing rate for borrowing the asset. For example, if the market-clearing rate is 5% per annum, the lender will get 4.25% per annum yield, the borrower will pay 5.75% per annum interest. 1.5% per annum would go to the Oxygen protocol and towards buy and burn of Oxygen tokens.
10. BeInCrypto: Wow, everything is clear now. Thank you for providing this example to us. Things definitely get easier to understand when we use numbers to explain haha. We’re almost over here but we still have time for one more question: I know that you chose to build on Serum/Solana ecosystems. What kind of partnerships do you have with Serum and Maps.me? How are all these players related?
Edward: There’s a number of reasons motivating our choice of building on the Serum and Solana ecosystems. The primary reason is that a widely adopted, on-chain, peer to peer borrow-lending protocol will need incredibly fast throughput to scale.
Oxygen is built on the Solana blockchain, which can support transactional activity on par with major payment giants and also allows for an on-chain orderbook thanks to its incredibly low transaction cost.
Oxygen will also compose directly with the Serum DEX, providing essential infrastructure for traders and real world applications. Maps.me, for example, will be one of the first major applications to build on Oxygen, allowing its users to earn passive income on their embedded DeFi wallets. As Oxygen leverages Serum and its vibrant ecosystem, we expect projects interested in integrating with or expanding on Oxygen’s functionality to take advantage of DeFi’s composability and build with us.
Regarding Maps.me, Oxygen is seeded by the 140M registered users of Maps.me, who will generate yield from their embedded wallets. Since DeFi yield is the first DeFi product within Maps.me (and it is worth noting that Maps.me users do not need to be made aware that this wallet functionality is necessarily DeFi-powered, as their daily concerns usually revolve around the fiat world), Maps.me users will form a critical mass and bring liquidity and credibility to Oxygen, springboarding our protocol as one of the largest fintech apps.
BeInCrypto: Thank you so much for sharing your ideas with us, Edward! I’m sure our community is quite satisfied with this intro we have provided about Oxygen!
Community: I heard #AMAOxygen have a risk management system in your project. Will it identify with fake pumps and isn’t it dangerous to trust artificial intelligence in trading or it’s not AI?
Edward: Indeed, as mentioned, Oxygen will have an on-chain risk management engine that is necessary necessary for a safe and sustainable borrow-lending and volatility products service offering. In its current set-up (https://oxygen.org/docs-intro.html to learn more), our LTV liquidation rules are established to prevent borrowers from even being able to approach taking on extreme risks.
In later, more sophisticated stages of Oxygen, the risk management systems will have to naturally evolve, and a large part of this is subject to governance by OXY token holders.
Nevertheless, we have taken steps to make sure Oxygen works as intended. Oxygen protocol has been reviewed by Alameda Research/Solana teams, leaders in high frequency trading, and Serum ecosystem leaders to ensure that Oxygen is indeed fit to accommodate high frequency and dollar value of assets trading.
We are also engaging Trail of Bits and other cybersecurity experts to provide software assurance to ensure maximum safety.
Community: We keep seeing project being lauched, seeing price dropping dramatically due to presale investors selling their tokens prematurely. Have you though or are you planning to implement any mechanism/precaution to prevent that from happening? Thanks a lot.
Edward: Good question. Presale tokens are actually locked-up for a 6 year period with a linear vesting schedule. As mentioned, we are long-term oriented here and every presale investor we’ve onboarded knows this and has demonstrated their commitment too towards supporting our goals.
Community: What kind of partnerships can we expect from Oxygen Protocol going forward? Could you give us any instance of how other projects can leverage OXY for their needs?
Edward: One route is through DeFi’s composability, so who wants to build on us (whether as a GUI or via API to user Oxygen’s functionalities). Maps.me is a classic example. The Maps.me 2.0 embedded wallet’s DeFi yield function being powered by Oxygen as a financial backend.
We invite more builders to join in and build on Oxygen — we’re serious about our protocol becoming a keystone and fundamental primitive not just to the Serum/Solana ecosystem but to DeFi overall.
Other strategic partners onboard are liquidity providers who will be active starting day 1 to make sure our borrow-lending protocol ‘hits the ground running’. Liquidity matters, after all.
BeInCrypto: Thank you so much Edward. We’ve really learnt a lot from you.