Temperature Check: Add Flux Finance fTokens as a strategy for OUSD

The Flux Finance team is proposing to integrate Flux-fTokens into the list of strategies available to OUSD. The Flux Team prepared an evaluation of the strategy and subsequently joined the Origin community call on 22nd May to answer questions from the Origin community.

The Flux team suggests that after a scale-up period (to enable the Origin team and community to become comfortable with Flux), a significant amount of the stablecoins currently held at Morpho could be moved to Flux in order to capture higher yield, collateralized by Ondo Finance’s Short-Term US Government Bond Fund (OUSG).

Evaluation of strategy: https://docs.google.com/document/u/3/d/e/2PACX-1vQMeNWFqLXEg1Ac-1V0Ve4BVFtw6hn6-3gW0B6YPlOTWJAqirGgaCjaZCjFroqKOMFjBVTn7KjUsPn3/pub

THIS PROPOSAL IS PROVIDED FOR SOLELY AND EXCLUSIVELY INFORMATIONAL PURPOSES. THIS PROPOSAL DOES NOT MAKE, AND NEITHER FLUX FINANCE NOR ANY OTHER PERSON MAKES, ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN CONNECTION WITH THIS PROPOSAL OR THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT, AND ANY AND ALL REPRESENTATIONS AND WARRANTIES ARE HEREBY DISCLAIMED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.

Overview Flux Finance is a fork of Compound V2, with minor changes to support permissioned tokens such as OUSG, alongside permissionless tokens such as USDC. Stablecoin lenders receive the corresponding fToken, representing their right to reclaim the underlying stablecoin plus accrued interest. Positions are collateralized by OUSG, which is invested into Blackrock’s SHV ETF (with a small portion of USD and USDC for liquidity purposes).

Motivation

• Provide a complementary source of yield to the current OUSD yield strategies. Currently, ~70% of OUSD stablecoin positions are at Morpho, yielding below 3% without incentives. Flux provides a sustainable strategy that currently targets a 3.9%+ yield.
• Generate arguably the best risk-adjusted yield available in DeFi, with positions being collateralized by OUSG.

Projected Returns Since launch, and without incentivization, stablecoin supply rates on Flux Finance have consistently outperformed Compound, Aave, Curve, and other major stablecoin lending protocols.

Current Flux stablecoin supply rates at 90% utilization: USDC: 3.96% USDT: 3.96% DAI: 3.96% FRAX: 3.96%