“Introducing ‘oUSD’: A New Credit Currency for Crypto Margin Trading from OPNX”

OPNX Launches oUSD Credit Currency for Margin Trading

Crypto futures exchange OPNX has introduced a new credit currency for margin trading, as per a July 5 statement made to Cointelegraph from the exchange’s co-founder, Mark Lamb. Dubbed “oUSD”, the currency is currently available in its “phase 1” iteration, meaning that users can only obtain it by depositing crypto assets into the exchange.

In a future “phase 2” version, the platform intends to make oUSD available to users who deposit crypto into on-chain contracts to enable possible “bankruptcy remoteness”, Lamb stated.

As per its litepaper, oUSD is a solution to three problems. First, lenders do not want to trust platforms to hold cash loans backed by crypto collateral. Second, exchanges and lending platforms don’t want to lend cash to margin traders, as this practice led to multiple bankruptcies during the 2022 bear market. Third, crypto derivatives traders want “portfolio margin”, or the ability to borrow and trade based on their crypto holdings rather than their stablecoin holdings.

To tackle this issue, oUSD functions as a “credit currency”. It can be purchased at a 1-to-1 ratio with Tether (USDT) or used to measure profit and loss when users rely on Bitcoin (BTC), Ether (ETH) or other cryptocurrencies as collateral. Users with a negative oUSD balance must pay an interest rate determined by holders of the platform’s native token, OX. Users who have a positive balance can cash out by redeeming it for USDT.

OPNX Exchange’s Controversial Past

In a conversation with Cointelegraph, Leslie Lamb, CEO of OPNX Exchange, claimed that users will eventually be able to acquire oUSD by staking cryptocurrency within smart contracts outside the platform. This will provide them with bankruptcy remoteness, protecting them from any potential insolvency of the exchange.

“The problem with most exchanges is that […] you’re the broker, the exchange, the ATS, the reporting agent, you’re every leg in the financial interaction,” Lamb stated, further explaining:

OPNX has been the subject of controversy since its inception, as two of its co-founders, Kyle Davies and Su Zhu, were also the co-founders of the failed hedge fund Three Arrows Capital. The exchange has been so heavily criticized that its CEO, Leslie Lamb, has scolded crypto investors for allegedly misleading the public by distancing themselves from it.

In response to a question about this criticism, Lamb argued that Davies’ and Zhu’s mistakes have helped them make OPNX a better exchange.