OIG Research Report: Octopus Protocol
Octopus is an open protocol to create, exchange, settle, and manage synthetic assets. The protocol enables the issuance of synthetic tokens and their exchange through decentralized derivatives. Octopus Protocol leverages innovative technological solutions like blockchain and smart contracts to facilitate a platform for engagement with decentralized derivatives. Through a trustless architecture, Octopus seeks to offer unparalleled access and exposure to real-world assets.
These synthetic assets, built on the blockchain, can represent an underlying asset in the physical world. Synthetic tokens track the real-time price of an underlying asset using oracles and give exposure without owning the real-world asset. Under the Octopus ecosystem, tokenized synthetic assets can directly be traded on a peer-to-peer network. Automated smart contracts govern the entire operation of minting and trading synthetic tokens. This removes the need to rely on a third-party intermediary with the protocol ensuring a trustless environment. Tokenization of synthetic assets on the blockchain also allows fractional ownership of the underlying asset. With blockchain, Octopus provides the necessary tools to fractionally divide an asset into desired units (tokens) and mint them on the BSC network. This allows users to raise synthetic tokens for any form of tangible or physical assets.
- Unparalleled Access to Real-World Assets: Decentralized Finance allows any individual, DAO, or party to have equal access to financial tools without centralized control or third-party intermediaries. In addition, the Octopus Protocol uses the innovation of DeFi to offer unparalleled access and exposure to real-world assets in an equally accessible financial ecosystem.
- Minimal Use of Oracles: Current oracle solutions are vulnerable in their design, i.e., they are susceptible to corruption. If the oracle is compromised, it can result in the manipulation of the smart contract. To minimize the loophole of corruption within the oracles, Octopus Protocol is designed to minimize the usage of oracles. By providing off-chain data for blockchain transactions in an incentivized environment, Octopus reduces the reliance on oracles and increases security within its ecosystem.
- Limitless Design Possibilities: Octopus allows users to create a basket of tokens to diversify cryptocurrency investment portfolios and minimize financial risks. The basket is represented by a synthetic asset that calculates the overall price of all the instruments. In addition, the Protocol allows any participant to access financial contracts or derivatives from any part of the world through synthetic tokens.
- Customized Derivative Contracts: Customized financial contracts have never been available to individuals as the costs for doing so have been restraining. However, Octopus Protocol facilitates contracts that fit personal circumstances along with preferred investment instruments.
- Non-Custodial: Synthetic tokens provide accessibility and leverage to the asset without going through the tedious process of owning the asset. They are also more affordable to hold as compared to real-world asset-backed tokens. Synthetic tokens also provide censorship resistance (non-custodial) which asset-backed tokens cannot offer due to custodian restrictions.
- Governance: Octopus Protocol is governed by anyone who owns $OPS tokens, Octopus’s native currency, fairly and transparently. All OPS token holders can propose a change to the protocol or vote on existing proposals.
- Trustless Architecture: Octopus Protocol leverages the innovation of blockchain and automated smart contracts to remove the factor of dependency on third-party intermediaries. Instead, all operations are managed by a pre-programmed network of smart contracts, which are automatically executable.
- Affordable Solution: Modern DeFi derivative solutions restrict innovation by demanding a higher deposit for collateral exchange for the issuance of tokens. Octopus provides an affordable solution to mint tailored synthetic assets by reducing the requirement for a high (amount) of collateral.
$OPS is the utility token of the Octopus protocol ecosystem. $OPS token serves multiple utility purposes in the ecosystem.
- Governance: $OPS tokens are used by participants to govern the Octopus Protocol, ensuring consensus in decisions in a decentralized network.
- Staking: Buyers and sellers can lock their $OPS tokens as a part of staking operations and receive rewards for committing deposits. This locks up $OPS and reduces circulating supply.
- Engagement: OPS tokens are used to incentivize actions across the Octopus Protocol ecosystem in several ways. They are a means to internally access the Octopus system for engaging with its products and services.