What is Oxygen (OXY)?
Oxygen (OXY) Explained
Oxygen Protocol is a non-custodial prime brokerage platform offering a variety of financial tools to decentralized finance (DeFi) users on Solana.
In traditional finance, prime brokerage services are offered by large financial institutions to qualified, wealthy investors—like hedge funds—to outsource a diverse range of trading opportunities.
These services can include cash management, risk management, lending and borrowing, and financing of leverage, among others. Prime brokers charge commissions and fees to compensate them for the services they provide to their clients.
Oxygen brings this prime brokerage model to DeFi. Through the use of smart contracts on the Solana network, Oxygen aims to offer its users improved accessibility, efficiency, and scalability compared to other blockchain platforms. The platform’s deeper level of decentralization means prime brokerage services are no longer reserved for millionaires, offering reduced fees as compared to traditional institutional middlemen while also increasing transparency.
Oxygen is powered by the OXY token, which is used as the payment medium for all fees generated by the ecosystem. OXY also is also distributed as a reward for those providing lending/borrowing discounts. Beyond its payment capabilities, OXY token also serves as a governance token, which allows its holders to vote on the future development of the platform.
Who Created Oxygen (OXY)?
Oxygen was founded by the London-based duo, Alex Grebnev and Viktor Mangazeev.
Grebnev’s professional experience spans top-tier financial institutions including Goldman Sachs and Merrill Lynch. Since 2016, he has served as the CEO of Moonshot Capital, a company that facilitates e-commerce and mobile app payments.
Mangazeev has described himself as a serial technology entrepreneur. After studying at Moscow’s National Research University (MEPhI), he would go on to co-found and serve as CEO of myDFS, a daily fantasy sports platform.
Grebnev and Mangazeev are joined by a team of employees across the world with a variety of experience in finance and software development. Oxygen AG – similar to an LLC – is based in the historically crypto-friendly country of Switzerland.
Oxygen boasts associations with large financial institutions such as J.P. Morgan and Goldman Sachs, and its investors include reputable backers like FTX and Alameda Research.
How does Oxygen (OXY) work?
Oxygen began by offering lending and borrowing services powered by Pools — collections of digital assets that facilitate many different actions on the Oxygen platform.
Users deposit assets into Pools and set their desired interest rates. Borrowers who agree to the terms these lenders have set can then access the assets to utilize how they wish. The market of lenders and borrowers is facilitated by an order book that matches those looking to borrow capital with those willing to lend it. Users can continuously use their deposited funds as collateral in the system, as Oxygen allows for multiple uses of the same funds.
There are two primary partnerships that give Oxygen a leg-up in the DeFi space:
- Serum: Oxygen operates through Serum’s decentralized on-chain order book, pairing borrowers and lenders. Users can also interact with Serum’s decentralized exchange (DEX) services directly from their Pools in Oxygen. The alpha version of Oxygen relies on Serum for pricing, order execution, and risk management (such as liquidation).
- Maps.me: The offline map service Maps.me was one of the first applications to build on Oxygen. Maps.me’s most recent version incorporates digital wallet services, allowing users to exchange currencies, transfer money, and even earn yield on money stored in the app. This functionality is enabled by Oxygen, which pools Maps.me users’ funds for purposes of lending in its ecosystem. As a result, Maps.me users can earn interest on their savings while Oxygen users benefit from added liquidity.
As it develops, Oxygen plans to support other prime brokerage services as well, including synthetic products, nonlinear assets such as derivatives, volatility trading, and more.
Why does OXY have value?
Native tokens in DeFi protocols typically have a few standard uses, and the OXY token is no different. OXY is the project’s utility token that is used for transaction fees and lending pool rewards as well as protocol governance.
However, Oxygen differentiates its token by offering more competitive fee structures as users accumulate more OXY tokens. Token holders fall into tiers based on the number of OXY held (e.g. 0-99, 100-999). Each tier grants increasingly better rates for both lending and borrowing, thus incentivizing adoption and utilization of the token.
There are 10 billion OXY tokens in total. Tokens were initially distributed as follows: 25% to product and tech growth, 20% to the community fund, 15% to Serum ecosystem incentives, and 10% each for private sales, Maps.me ecosystem incentives, the IEO/partners, and compensation to the development team.
According to the project’s whitepaper, 88% of tokens were locked up with a vesting schedule over the course of six years.
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Why use OXY?
Oxygen has taken a targeted approach to DeFi on Solana, attempting to recreate a similar suite of services as investment banks have offered to only the wealthiest of investors in the past.
The project began by providing trading and lending/borrowing services to its users. However, it plans to offer additional features such as volatility trading, structured product functions, and other financial tools to traders in a decentralized, accessible way. Powered by Serum and with the potential to more deeply leverage Maps.me’s over 100 million users, Oxygen’s developers see a bright future for the platform.
Crypto users may be drawn to the complete financial offerings of Oxygen, hoping to take advantage of a model that has worked in traditional finance for a long time. By building on Solana, Oxygen promises to facilitate fast, cost-effective transactions and create broad DeFi functionality for its users.
In addition to the utility in governance of the ecosystem, holding OXY benefits users of Oxygen, as this provides them a reduced fee while maximizing their capital efficiency. Traders may also be interested in holding OXY if they believe the project will garner broader appeal with Solana’s DeFi users.
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