[TEMP CHECK]: Add support for Wrapped Origin Sonic (wOS) to Aave v3

Governance New Asset
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TEMP CHECK: Add support for Wrapped Origin Sonic (wOS) to Aave v3

Author: Peter from the Origin Protocol core team

Date: 2025-02-04

1. Simple Summary

In response to the Temp Check and recently passed ARFC proposal of deploying Sonic markets on Aave, this is a proposal for adding supply/borrow support for wOS on the Aave Sonic Instance.

2. Motivation/Background

Origin Sonic (OS) was launched in January 2025 and is an ERC20 LST that generates yield while sitting in your wallet by delegating S to a node operator. Similar to stETH, OS yield is paid out daily and automatically (sometimes multiple times per day) through a positive rebase in the form of additional OS, proportional to the amount of OS held.

Several LSTs trade below their peg due to DEX fees and slippage, and to reflect the time value of money. LSTs that consistently trade below peg effectively impose a hidden exit fee - certain LSTs often trade ~0.25% below peg, meaning it takes three weeks of staking to break even. This may be ok for long-term holders, but is terrible for users who plan to loop LTSs for additional yield. This was not the case for OETH or superOETHb, and will not be the case with OS.

Using OS on Aave will produce higher yield than other supported Sonic LSTs and have a near perfect S peg. The coming OS AMO will strengthen the peg, increase capital efficiency, and maximize yield. Our vision for OS is for it to become the most trusted LST for those seeking to use an LST for leveraged staking on Aave’s coming Sonic instance.

Obtaining OS is effortless, users can convert their S into Origin Sonic via any of the following methods:

wOS is a ERC-4626 tokenized vault designed to accrue yield in price rather than in quantity. When you wrap OS, you get back a fixed number of wOS tokens. This number will not go up - you will have the same number of wOS tokens tomorrow as you have today. However, the number of OS tokens that you can unwrap to will go up over time, as wOS earns yield at the same rate as standard OS. The wOS to OS exchange rate can be read from the contract (function number 16), or via the OS dapp.

Current exchange rate as of 2/04/25: 1 wOS = 1.00614219 OS

Security Considerations

OS was launched in January 2025 with 95% of its code forked from OUSD, which has been the basis of our other yield-bearing tokens OETH and Super OETH as well. This allows OS to inherit years of top-tier audits and a proven track record of securing hundreds of millions of dollars worth of underlying collateral. All OS audits can be found in the audits section of the OS docs. We have recently retained yAudit to look at our PRs as we code, and OpenZeppelin is also held on retainer to review 100% of the OETH and OUSD smart contract changes. Origin maintains an active bug bounty with rewards ranging in size from $100 OUSD for minor issues to $1,000,000 OUSD for major critical vulnerabilities. The bug bounty program is currently administered by Immunefi, where Origin maintains a median resolution time of 6 hours.

We are in talks with Chainlink, Redstone, Pyth, and API3 about deploying an OS/S price feed, but the redemption rate of OS to S can also be used to derive the price of OS on chain (OS redemptions back to S are currently available and were available at launch). Origin Sonic likely qualifies for a Correlated-Asset Price Oracle (CAPO) based on similar LSTs that have qualified.

Performance

Origin Sonic has seen healthy growth since launching on January 14th of 2025. Proof of Yield tracks the distribution of each Origin Sonic rebase event and displays the compounded yield on an annualized basis each day. The current Origin Sonic TVL sits at $2.6m (5.2m S) with a native yield of 17.69% APY:

Screenshot 2025-02-04 at 3.16.16 PM
Screenshot 2025-02-04 at 3.16.16 PM1217×596 44.6 KB

Origin Sonic is growing at a steady rate and is currently the number two spot by TVL on Defillama for LST projects on Sonic:

Screenshot 2025-02-04 at 3.17.23 PM
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and is the number 11 spot for all protocols on Sonic:

Screenshot 2025-02-04 at 3.17.49 PM
Screenshot 2025-02-04 at 3.17.49 PM2184×1390 416 KB

There has been immense demand for borrowing S against OS for leverage looping on money markets since launch due to the high underlying OS APY, and since OS and wOS earn 2x Passive Points and 4x Active Points (8x total points) when used in Defi protocols.

Screenshot 2025-02-04 at 3.20.25 PM
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Origin has managed to integrate and onboard Origin Sonic into a variety of protocol verticals, including vaults, perps, and money markets:

Benefits of listing Origin Sonic

Since 2021, Origin has streamed millions of dollars in stablecoin to Aave markets via OUSD strategies, generating millions in yield and significantly boosting Aave’s TVL.

Enabling lend and borrow support for wOS on Aave will provide a new market for OS holders and Origin Protocol users, and add a new platform for leverage looping S. This new Origin Sonic market would lead to additional increased TVL for Aave’s new Sonic instance, additional revenue to the Aave Protocol and DAO from active loans and liquidations, and will attract a wider user base due to Origin Sonic being significantly higher yielding over the other Sonic LSTs that have launched.

Proof of Liquidity (POL) and Deposit Commitments

While no incentives have been used within any Origin Sonic integrations due to the high native yield of Origin Sonic, the Origin Protocol team is open to providing seed liquidity to jumpstart the Origin Sonic market on Aave once wOS is onboarded. More accurate amounts will be discussed with the Aave team and the ACI and can be shared during the ARFC stage of the proposal process.

3. Useful Links

This is Origin’s fifth proposal to Aave, after proposing to add OGN as an Aave asset in 2021, proposing to add OUSD as an Aave asset in January 2023, proposing to add OETH as an Aave asset in September 2024, and proposing to add superOETHb as an Aave asset also in September 2024.

Additional relevant links:

4. Disclaimer

Peter is a member of the core Origin Protocol team. No additional compensation was received for publishing this proposal. This proposal is following the ACI Skyward process and framework.

5. Next Steps

  1. If consensus is reached on this [TEMP CHECK], escalate this proposal to the Snapshot stage.
  2. If the Snapshot outcome is YAE, this proposal will be escalated to ARFC stage
  3. Publication of a standard ARFC, collect community & service providers feedback before escalating proposal to ARFC snapshot stage
  4. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal

6. Copyright

Copyright and related rights waived under CC0.

1 Like
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full support for adding supply/borrow support for wOC. Will be a great addition to the already proposed assets.

1 Like
3

The current proposal has been escalated by ACI, under Skywards program, to TEMP CHECK Snapshot.

Vote will start tomorrow, we encourage everyone to participate.

1 Like
4

Seeding the Aave v3 Sonic market with in-demand assets is generally a good strategy. However, we’d like to see a detailed risk analysis, especially with the OS/S Chainlink price feed not yet up and running - we want to better understand the risks (if any) of using the redemption rate of OS to S to derive OS price onchain.

Additionally, some form of revenue projections would also be welcome. We understand that leverage looping S could be a use case, and that Aave could accrue increased TVL, but would like to understand the magnitude of the increased TVL/revenue.

5

We would appreciate seeing specific amounts at the ARFC stage to support wOS; we also join our voices with that of @sid_areta to reiterate the need for a Chainlink price feed.

6

A risk analysis will be performed on the ARFC stage by ChaosLabs and LLamarisk.

The need for a reputable feed is understood. Until a suitable feed is in place, CAPO might be the best option.

7

We will support this proposal at the TEMP CHECK stage as we believe it will be beneficial to receive a thorough analysis from Aave’s Risk Service Providers.

Usually, we are cautious about listing assets with low TVL on Aave as the Risk/Reward ratio is not worth it. However, we recognise the current attention to Sonic’s DeFi activity and the high yield that OS provides which could be fruitful for Aave in the long run.

Our main concern is around the lack of audit for wOS. While we understand that 95% of the code is forked from an existing codebase that has been audited we’d like the team to highlight what changes to the code are present in wOS and we would feel more comfortable supporting wOS on Aave with a full audit of its codebase.

2 Likes
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As Michigan Blockchain, we are in favor of adding supply/borrow support for wOS on the Aave Sonic Instance. OS is the second LST on Sonic in terms of market cap, behind stS (Beets Staked Sonic). At the time of writing this, OS has a market cap of only $20.0m compared to stS’s $123.2m.


OS total supply chart in terms of S

Despite this, we think that it is beneficial to add Os on the upcoming Sonic Instance. The last 30d average APY is at 15%, though 7d average is around 12%.


OS APY chart (line shows 30 day average)

The high APY means there will be demand to use OS for leveraged staking where users borrow wS against OS. For example, on Silo Finance, stS (which is the leading LST) TVL is 88.2m stS, which highlights the great demand for this asset on lending platforms. Since most of the stS supply is already on Silo Finance, it is a good decision to choose OS as the LST to be onboarded to the Sonic Instance, because it could be very hard to gain stS market share as there are currently extensive incentive point programs for stS on Silo and stealing this market share could be difficult. However, since OS is not currently listed on this leading lending platform on Sonic, there isn’t currently major competition for OS, so Aave could easily gain market share in the Sonic LST market. This is both beneficial for Aave because being able to provide OS as collateral as a yield strategy will onboard more users to the Aave Sonic Instance and thus grow TVL, and also beneficial for Aave users because they will be able to be involved in the Sonic DeFi ecosystem while using the most robust and tested decentralized lending platform, that is Aave.

-Kerem Dillice

9

After Snapshot monitoring, the current TEMP CHECK Snapshot has ended recently, reaching both Quorum and YAE as winning option, with 815.7K votes.

Therefore, [TEMP CHECK]: Add support for Wrapped Origin Sonic (wOS) to Aave v3 has PASSED.

Next step will be the publication of an ARFC to continue gathering feedback from Service Providers and community. Closing thread to focus on ARFC.

1 Like