OGN Tokenomics

Summary:

Proposal to introduce improved tokenomics to OGN post-merger with OGV.

Background:

The proposed merger to absorb OGV into OGN saw two successful governance votes in recent weeks. The initial proposal to the OGN community was followed by another proposal to the OGV community. Both proposals have passed with overwhelming support, placing OGN at the core of Origin’s diverse multichain yield ecosystem.

Based on the approved proposals, OGV holders and veOGV stakers will have 1 year to convert their holdings into OGN and xOGN, respectively. The approved exchange ratio was based on a snapshot of OGN and OGV on April 1, 2024 at 12:00AM UTC. At that time, OGN was trading at $0.21731 and OGV was trading at $0.01986. Current holders of OGV will therefore be able to convert their OGV to OGN at the stated exchange ratio of 0.09137 OGN per OGV.

Work is currently underway to create an interface that allows OGV holders to convert their tokens to OGN. Similarly, veOGV holders will be able to convert to xOGN to earn governance and economic rights. We will also allow users a one-time exit option on their staked positions to OGV without penalty for those OGV holders that do not wish to continue staking with OGN.

Below, we propose tokenomics changes and describe their impact on the OGN ecosystem. We also propose introducing new utility to OGN in the form of governance privileges and value accrual.

OGN Supply:

OGN’s current circulating supply is 573,135,902 and the total supply is 1,000,000,000.

To absorb the total supply of OGV at the snapshot ratio of 0.09137 OGN per OGV, there will be a one-time mint of 409,664,846 OGN, bringing OGN’s total supply to 1,409,664,846.

However, the vast majority of these minted tokens will not enter circulation. We anticipate approximately a 10% increase in circulating supply by the end of year one post-merger, leading to approximately 630M circulating OGN in May of 2025. This is well below initial projections that were published at the request of multiple exchanges in the past.

• Upbit projections (https://static.upbit.com/guide/circulating_supply/OGN_20231205.pdf) - 703M estimated circulating tokens for April 2024 and 774M estimated circulating tokens for May 2025
• Binance projections (https://www.binance.com/en/research/projects/origin) - 800M estimated circulating tokens for April 2024 (no estimate for May 2025)

Historically, the Foundation has sought to make ongoing token emissions more conservative than were originally allocated to Community incentives, liquidity mining, etc. In this case, we anticipate being well over 100M short of the projected circulating supply one year from the merger.

There are multiple reasons that circulating supply will only modestly increase over the next several years, despite the one-time increase in total supply.

• Note that over 86.1% of OGV’s total supply is not part of the circulating supply. Circulating supply currently sits at 622,939,474 tokens. The remaining 3,874,032,143 of non-circulating OGV will convert to non-circulating OGN by default.
• Next, we will be releasing a new staking contract that allows users to convert OGN to vote-escrowed OGN (xOGN). This program will grant governance and economic rights to xOGN holders. We anticipate that additional OGN that is currently circulating today will be locked up in the new staking contract, creating a powerful new token sink.
• Finally, the Origin Treasury is further committing to locking any OGN and xOGN that it receives from the completed merger.

This token merger also presents us with an exciting opportunity to introduce improved tokenomics for OGN based on learnings and feedback we’ve received over the years from both OGV and OGN holders. Please see an outline of the proposed token utility below.

Overview:

OGN will adopt a similar governance and value accrual mechanism as OGV currently has, including the ability to stake OGN for vote-escrowed OGN (xOGN) for governance and economic rights. As a result, OGN will become more decentralized and have increased utility.

New OGN/xOGN

• Buybacks: In line with the previous OGV model, a 20% performance fee will be taken from yield earned on OETH and OUSD. Of that performance fee, half will be redistributed to OGN stakers. The other half will be used to acquire flywheel tokens such as CVX or CRV in order to generate additional yield for the protocol. In addition, as fees are added to Origin’s new products, such as primeETH and ARM, more protocol revenue will be accruing to OGN. It is the intention of the core team that our entire updated roadmap, including multi-chain OETH derivatives and LSTs for other EVM chains, will all accrue value to OGN.
• Staking rewards: will be funded by the Origin Treasury and protocol revenue buybacks.
• Voting Power Curve: The voting power and APY users earn for locking up OGN will have a flatter decay curve on OGN than it did on OGV. This will increase the rewards users earn for locking up tokens, even if they don’t max lock. The K factor will decrease from 1.8 to 1.4.
• Max Lock: OGN holders will be able to lock their tokens for up to one year (compared to the previous 4 year max lock on OGV) and minimum of one month. Having analyzed OGV and other DeFi tokens, we believe a shorter max lock up will further incentivize stakers to participate, further decreasing circulating supply and increasing governance participation.
• Early Exit: OGN will offer a novel “early exit” option for stakers (which wasn’t available with OGV) allowing them to exit a stake early but pay a penalty that will depend on the time left in the lockup. The penalty for unlocking OGN early will result in OGN being redistributed to current active OGN stakers.

Legacy OGV/veOGV

• No new stakes will be allowed after the token migration goes live
• All stakes will become unlocked. Users will be guided to migrate to OGN staking by converting their veOGV to xOGN.
• Holders can continue to claim any accrued OGV rewards
• New OGV staking rewards will be stopped when the migration contracts are deployed and audited (targeting end of May), encouraging users to migrate to OGN
• There will be no more new buyback rewards on the OGV contract as all buybacks will now occur with OGN

The core team believes the merger will align Origin’s core team, open-source developers, and community members under a single token, OGN, enabling all ecosystem participants to be focused and share in the same incentives going forward.

Voting options

This proposal has two options:

• Accept: Move forward with the proposed tokenomics.
• Decline: Do not move forward with the proposed tokenomics.

Voters that are in favor of improved tokenomics under different conditions are encouraged to vote “Decline” and then provide comments and proposals for alternative mechanics.

While these are the tokenomics proposals from the core team, the community may always choose to amend or update the tokenomics mechanics with future governance proposals.