OPEN, the governance token of Open DAO—a DeFi protocol aiming to bridge real-world assets with the crypto-verse, will launch on Nov 26. It will be available for purchase via Cashbox and Uniswap as per a Nov 12 update.
Uniswap is one of the largest decentralized exchanges by trading volumes. Users will buy tokens from the portal without an intermediary. Liquidity will be provided by OPEN Cashbox Liquidity Providers (LPs).
OpenDAO also said users with OPEN allocations will receive tokens 24 hours before the Uniswap listing. However, OPEN Cash Boxes will be opened at various price points allowing farming.
The rollout follows the conclusion of the protocol’s beta testing of the Cashbox.
According to an OpenDAO developer, Cashbox is integral to their architecture. By linking tokenized real-world assets like stocks, real estate, and invoices, to decentralized finance (DeFi), previously inaccessible and illiquid assets can be used as collateral for loans.
This way, Cashbox works like a decentralized order book enabling efficient price discovery; evolving how projects crowdfund. The Cashbox is a pool of cash (stablecoins) that acts as a perpetual counterparty for real-world asset tokens funded by LPs.
Therefore, if a liquidator takes control of real-world assets like stocks, for example, which was used as collateral for loans, they can sell those tokens to the Cashbox for stable coin (cash).
Open DAO LPs are buyers of last resort for the asset token on the system. LPs own the physical assets at a discount. To recoup funds, the protocol uses different strategies. For example, listed shares will be sold at spot rates through APIs on the borrower’s exchange. Cash is converted into stablecoin and distributed to LPs.
However, selling real estate will involve an approved Special Purpose Vehicle (SPV) who owns and can convert them into shares that can be tokenized. Cashbox LPs can sell their tokens back into shares and sell them back to the SPV.
Besides ownership of the collateral, Cashbox LPs earn fees. Moreover, when they stake their Cashbox tokens they earn OPEN governance tokens as an incentive for liquidity provision.
Open DAO Acquires Property in Australia
OpenDAO has secured a commercial property in Melbourne, Australia. The real estate’s share registry is already tokenized. Users can now purchase tokens of the Australian Real Estate Investment Trust (AREIT), the owner and manager of the property, using DAI. On buying, users qualify as Liquidity Providers and a counterparty to the property.
Purchase of these property’s tokens requires compliance with AML and KYC rules.
Fractional owners can leverage their tokens by supplying them to the OTL or oUSD minter—forked from Synthetix, as collateral and borrow loans via the Cashbox where a price oracle will regularly update the price of the physical asset’s share. The oUSD is the OpenDAO stablecoin backed by real-world assets approved by the DAO.
Token holders can stake and earn OPEN tokens against them, earning higher rates than the DAO’s OPM. Lenders to the OPM will begin earning OPEN interest from Nov 26 in addition to the interest accrued whenever they supply stablecoins.
DeFi Growth and the Bridge
Relying on Ethereum’s composability, DeFi is currently experiencing a Cambrian explosion. The total value locked (TVL) under management by different protocols now exceeds $13 billion according to Defi Pulse. Alexander Lebedev, the owner of the Evening Standard and the Independent newspapers in the UK, in an opinion article said DeFi was revolutionary according to a BTC Peers report.
Despite this success, OpenDAO developers say the absence of reliable bridges connecting real-world assets to DeFi is a hindrance. Adding that the current state of DeFi resembles a casino and is a zero-sum game, limiting value creation.
The OpenDAO Cashbox acts like a bridge and can boost the DeFi TVL by 100X, enabling assets like high performing stocks like Tesla to be used as collateral. Additionally, leveraging permissionless capital markets built via DeFi reduces the cost of capital and avail more opportunities for investors.
Disclaimer: This is a paid post and should not be considered as news/advice.