OlympusDAO developer launches protocol for one-to-one stablecoin swaps
A developer of Olympus DAO has released a protocol that enables stablecoin swaps without any price curves.
On October 26, the developer “Ohmzeus” has announced the launching of an experimental project dubbed Range. It comprises decentralized stablecoin pools that do not include a price curve.
The programmer has described Range as an “optimistic stablecoin swap protocol” that is designed keeping in mind the strategy of abandoning the pricing curve altogether.
The protocol makes use of “Range Pools,” that by default assume both of the tokens in a pool are of an equal value. At present, there are six live pools for DAI, FRAX, LUSD, USDT USDC, and MIM; although the developer has stressed that they are unaudited; hence users must not deposit more than they can afford to lose.
On Discord, deposits to the USDC/USDT pool have been suspended as of now due to a decimal place error.
In this protocol, tokens trade within a pre-defined range. Citing the example of a Range 20/70 pool in which DAI is one of the pairings, developer Ohmzeus has said that as the range for the stablecoin is set to 20 per cent to 70 per cent in the first pool, DAI must comprise at least 20 per cent of the pool and that it should not exceed 70 per cent. Any attempts to trade outside of those limits would be rejected.
The protocol’s maintenance of price parity between stablecoins offers various arbitrage opportunities for its users as stablecoins rarely trade at their exact equal value on both centralized trading venues and decentralized exchanges.
Ohmzeus has also claimed that the system offers a variety of other advantages over swapping stablecoins that use traditional automated market makers, citing one-to-one stablecoin swaps, capital efficiency and low gas fees.
Ohmzeus has also suggested that Range could be used for mobilizing stablecoin reserves held by Decentralized Autonomous Organizations (DAOs) while noting that the protocol enables OlympusDAO to productively deploying its reserves in an isolated environment where its exposure to different assets is “defined and controlled.”