DESCRIPTION OF BUSINESS

EXECUTIVE SUMMARY

OIN Finance is a DeFi project built on the Ontology network. It introduces a new stablecoin, USDO, pegged to the US Dollar on a 1:1 ratio. Additionally, it offers interoperability with other blockchains, being them Ethereum, on a first instance, and at later stages Polkadot and Cosmos. Users can lock ONT coins as collateral through the OIN-DAO (Decentralised Autonomous Organisation) and take loans by minting USDO. Minting USDO requires at least 300% over-collateralisation. 

The emerging DeFi ecosystem is largely concentrated in one platform, Ethereum. This has resulted in network congestion and an increase in transaction fees, stopping many users from using the network. Due to these current limitations, the value proposition of creating an interoperable DeFi platform is particularly attractive. 

The project does not provide any information regarding their team members’ experience and track record. Since the team is mostly from China and other regions of Asia, it is hard to find information about the members in western media or social media. OIN doesn’t list any advisors on their website either, despite 2% of their tokens being allocated to advisors.  

There is no information regarding a registered company, in any jurisdiction, developing the project, even though the disclaimer of the whitepaper mentions ‘OIN Finance (the company)’. There is also uncertainty about the type and degree of involvement of the said company with the project, or other details about it. Based on the governance statement on its website, OIN is governed entirely by a DAO, the community and OIN holders. The decision-making abilities of this community include adjusting policy for the USDO, setting the ratio of payouts between staking and liquidity mining rewards, choosing new collateral assets, deciding the next public blockchain to integrate, and improving governance itself.

OIN Finance is raising $14 million by selling 15% of their total token supply in three rounds. The total amount of OIN tokens is 100,000,000. There is no information by the team about how they are going to allocate the funds raised.

Our researchers gave OIN Finance a final rating of 62%.

PRODUCT & COMPANY DESCRIPTION

Product

OIN intends to be the first DeFi application (Layer 2) that runs on any blockchain (Layer 1 protocol), starting with Ontology. Ethereum dominates the booming DeFi industry but, despite being the largest blockchain platform, it has significant performance and scalability limitations. Therefore OIN has a strong value proposition for blockchain interoperability.

OIN is introducing its stable coin, USDO, which is 700% collateralised. This means that, for every $7 million assets locked as collateral, $1 million USDO are created.  Additionally, OIN offers the option of staking and Liquidity mining. Users have the opportunity to stake their assets or offer them as liquidity and get OIN rewards, be distributed proportionally to the stake size. USDOs can be borrowed or earn interest through lending.

Mission

OIN expresses their mission as:

“OIN will build a foundation that is able to integrate and leverage the value of the cryptocurrency market itself.”

Success Factors

  • Presenting a solution for the high transaction fees of Ethereum.
  • Being the first DeFi application on Ontology.
  • Cross-chain interoperability, starting with Ontology/Ethereum.
  • Strong VC backing.

MARKET CONDITIONS AND COMPETITION

Market Conditions

With the Decentralised Finance ecosystem booming in 2020 and its total value briefly surpassing $12 Billion on October 22, 2020, most of it is concentrated in the Ethereum platform. The resulting network congestion and increase in Gas fees make the usage of the network difficult for many of its users, with some deciding to abstain from it.

Competition

OINs’ ultimate aim is to create a platform on which DeFi projects can run. Considering that Ethereum is the leading platform for DeFi projects to use, it is apt to think of Ethereum as the main competition to OIN, if not the only one.

Having only one real competitor might appear to be a good thing. However, Ethereum is an extremely popular network in the blockchain industry. Despite its shortcomings, it has proven to remain a preferred platform for developers and users. It will, therefore, require much effort to eat into its market share.

Another immediate competitor is MakerDAO, with its stablecoins DAI and SAI. OIN’s USDO stablecoin works similarly to the algorithmic stablecoins of MakerDAO, issuing over-collateralised loans in the form of these stablecoins. 

In terms of interoperability, OIN faces intense competition as well. Its stronger competitors include:

  • Polkadot
  • Fusion
  • Cosmos

TECHNOLOGY REVIEW

Products

USDO stablecoin

USDO is an algorithmic stablecoin introduced by OIN to power its DeFi applications. It is issued when a collateral asset is locked, on the basis of 7:1. This means that every time $7 million are locked as collateral $1 million of USDO is minted. This is comparable to what MakerDAO is doing with its algorithmic stablecoins DAI & SAI. The stablecoin will have interoperability with Ethereum to be used in the network’s DeFi protocols. 

There is conflicting information coming from the project’s website and whitepaper. The above collateralisation ratio comes from the website, and below is the data coming from the whitepaper. It’s not clear whether the collateralisation ratio is of 700% or 300%.

OIN Swap’s V1 & V2 Pool

V1 liquidity pool is the first one built for the Ontology Ecosystem. V2 is a cross-chain liquidity pool connecting the Ontology and Ethereum DeFi Ecosystems. V2 is also compatible with the Poly network and Cosmos.

Blockchain

OIN uses Tendermint’s consensus algorithm based on the BFT (Byzantine Fault Tolerance); it allows the byzantine fault of some nodes, but ensures finality and avoids forking. The underlying Ontology blockchain uses VBFT (Verifiable BFT), which is a hybrid of PoS, VRF (verifiable random function), and BFT.

OIN hired the company BEOSIN to perform smart contract security audits for the OIN ERC20 token, USDO ERC20 token, Dparam contract, Oracle contract and OinStake contracts. All of these audits have produced positive results. The full report by BEOSIN is on OIN’s official blog on Medium: https://medium.com/oin-finance/oindao-passes-smart-contract-audit-237ac7e33e3d

ROADMAP

There is a roadmap provided on the project’s website. It is, however, not detailed enough to provide all the information a user would need to know about the project’s development. It gives a timeline from Q1 2020 till Q2 2021. Aside from this being a relatively short road map timeline, it does not provide targeted dates of completion for most of the tasks presented. It is also unclear as to which milestones have been attained, and the ones left to complete.

TEAM

Renard Zhang, CEO: He has years of FinTech experience as a consultant for the United Nations (UN). He also has experience in the private equity and investment banking industries. You can find his LinkedIn profile at: https://www.linkedin.com/in/renard-zhang-1636431b4/

Amo Huang, CTO: He has years of technology and development experience, with crypto development experience while being CTO at TimingEx. He was also the CTO of ZGTop in China. You can find his LinkedIn profile at:  https://www.linkedin.com/in/amosun/ 

General Comments on the Team

The project does not provide any information regarding their team members’ experience and track record. They have a minimal online trace, at least when it comes to Western/English social media. OIN doesn’t list any advisors on its website, either even though 2% of the tokens are allocated to advisors.  

In general, we notice that, as a trend, projects from Asia disclose little to no information about their team members. The same can be said about the information that these individuals disclose about themselves, even when publicly named.

LEGAL AND COMPLIANCE SPECIFICS

While there is no information regarding a registered company developing the project, the disclaimer of the whitepaper mentions ‘OIN Finance (the company)’ as the company preparing the document, and as the company which the disclaimer covers. According to the governance statement on its website, OIN is governed entirely by a DAO, its community and OIN holders. This includes adjusting policy for the USDO token, setting the ratio of payouts between staking and liquidity mining rewards, choosing new collateral assets, deciding the next public blockchain to integrate, and improving governance itself. As per the whitepaper, the initial decision-making (token listing, protocol variable adjustments and partnerships) will be made in a centralised manner, which suggests that likely this will happen through OIN Finance (the company). The whitepaper and the website do not contain details about the referred company, its jurisdiction, ownership, etc. Therefore, making a legal assessment of this company is particularly tricky.

Token Classifications

OIN token is considered as a utility token within the OIN ecosystem. The OIN tokens minted by staking will come from the USDO collateral pools in the OIN-DAO and OIN-Lend. Initially, 40% of the daily minted tokens will be distributed as staking rewards, and the remaining 60% as liquidity mining rewards. Over time, the community can vote via the governance token to adjust the daily allocation.

It is not clear how the regulators will see the classification of OIN tokens as a limited number of tokens will be sold for fundraising purposes, which can make them be considered a security in some jurisdictions. Also, it is unclear whether some of the transactions, products, and services carried within the ecosystem and through the use of these tokens will be subject to any applicable laws or regulations.

Partnerships

BEOSIN – Audit Partner: OIN lists Beosin (LianAnTech), a Security Audit firm from China, as its audit partner. It’s important to notice that this is the same company that audited OIN’s smart contracts and technology.

Ecosystem partners: 

OIN has partnered with NEST Protocol for price oracles, and OIN will offer the NEST dApp to its community.  

Elrond is identified as a platform that will be compatible with OIN Finance products. Elrond has verified this partnership on its blog. 

QuarkChain is listed on the website as an ecosystem partner.

Standard Tokenization Protocol is also listed as a partner on the website.  

Ten investors are also mentioned on the website. Namely, Alameda Research, Blockwater Management, CMS, FBG Capital, FTX, GBIC, Moonwhale, Ruby Capital, Signum Capital (OIN is effectively listed under its portfolio on the website) and Waterdrip Capital.  

KYC and AML

Investors have been hand-picked for OIN’s private sale.

The public token sale was restricted in several countries, namely: China, USA, Canada and any other country sanctioned by the UN. Participants in this public sale were selected based on a lottery system. All 320 of them were then subjected to KYC to be able to participate in the public sale. To complete this procedure, the below documents were requested:

  1. A government ID or passport.
  2. A with said ID or passport.
  3. A selfie with their signature on a blank piece of paper.
  4. A residential address.

Legal Risks

The DeFi market is still in its early stages, and it is still quite difficult to classify the tokens used on these projects within the binary spectrum of security or utility classes. Even though the tokens might not be asset-backed, the lending aspect that has become usual in DeFi inures to interest earnings, which can raise regulatory eyebrows. This uncertainty is also present in the discussion of the classification of OIN’s tokens and is contemplated in the ‘Terms of Use and Risk Disclosures’ section (pg 20-24) of the whitepaper.

Legal risks identified: 

  • There is no clearly-identified registered company developing the project and carrying out fundraising activities. While OIN Finance is presented as the company preparing the whitepaper, no specific details regarding the company’s name, its jurisdiction, or its precise involvement with the project and the fundraising component are available. In this regard, there is no security for investors. Also, it is challenging to conduct a complete legal assessment in the absence of details regarding the company involved in the project. 
  • The token classification is not clear. OIN tokens are viewed as utility tokens. However, the fundraising aspect and the type of transactions carried out on the platform using these tokens render such classification uncertain. There is a possibility for OIN tokens to be regarded as security tokens under some jurisdictions and regulators, thereby potentially triggering the application of securities laws and regulations and requiring the obtaining of specific licenses and authorizations. 
  • No legal advisors have been identified by the project. While the whitepaper anticipates the allocation of tokens to advisors, it is unclear whether any tokens will be allocated to legal advisors to cover the legal components of the project.  
  • There is no privacy and data protection policy.
  • There is uncertainty as to the potential regulation of DeFi loan-based platforms, which could impact the operation and compliance obligations of OIN’s platform. This is inherent and inevitable for all such projects.

TOKEN OFFERING

The following is OIN’s projected token allocation for their total issued 100,000,000 OINs.

OIN Finance is raising a total of $14 million by selling 15% of the token supply in three rounds: 

  • 2% through a seed round, with a valuation of $1 million.
  • 10.6% through a private round, with a valuation of $5 million.
  • 2.4% through a public round, with a valuation of $8 million.

There is no information available for the allocation of raised funds.

Vesting periods: 

  • 10% of the tokens sold during the seed round will be unlocked after OIN’s exchange listing, and the rest will be unlocked at a rate of 20% every three months.
  • 25% of the tokens sold during the private rounds will be unlocked after the exchange listing, and the rest will be unlocked at a rate of 25% every three months.
  • Tokens sold during the public round will not be locked.
  • The tokens for the team and advisors will be locked for half a year and follow a rate of unlocking of 20% every six months. 

SOCIAL MEDIA AND VIRALITY

OIN has a relatively sizable following on Twitter (6K+),  the account is active and also gets good engagement.

OIN Finance has only 15 followers on LinkedIn. This  is not an active channel.

Two employees are identified under OIN Finance’s LinkedIn profile. Namely, Daniel Kwak – Marketing Director and Rica Espinosa – Community manager.

The project has an active Telegram group with 12k members.

The project does not have its own YouTube channel but there are third-party channels with explanatory content about the project. Some of the channels featuring OIN Finance content are:

BoxMining – 216k subscribers. https://www.youtube.com/watch?v=EBr-2GK69I4&ab_channel=Boxmining 

Professor Crypto – 106k Subscribers. https://www.youtube.com/watch?v=XN8L8kTDoQU&ab_channel=ProfessorCrypto 

Rey Santos Crypto – 7k Subscribers. https://www.youtube.com/watch?v=rYhEvJVRLC0&ab_channel=ReySantosCrypto 

Even though the project does not have its own YouTube channel, the channels reviewing it have a significant following. This helps the project to reach a wide audience.

RATINGS

Everything you see in this report is the aggregate result of an extensive research process carried out by a distributed team of researchers and crypto enthusiasts around the world. The process consists of 60 questions divided into three phases. Researchers are called to answer these questions about a project, while providing links or screenshots as evidence to support their answers. For every answer, they also provide a rating from zero to five. The average of their ratings is detailed below. 

Our researchers gave OIN Finance a final rating of 62%.

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence.

D-Core excludes and disclaims all liability and/or responsibility whatsoever and/or howsoever caused, arising out of any actions, or omissions taken, or made by any authorized and/or other recipient of this Report in reliance on, or arising out of, or in connection with any or all content of this Report. Any authorized and/or other recipient of this Report acknowledges, accepts and agrees that they carry out their own independent research and act in their own sole risk in reading or using any or all information contained in this Report. In any event, recipients of this Report are urged to seek professional advice before making any potential investment decision in relation to the project described herein. Any authorized and/or other recipient of this Report accepts this Disclaimer in full. For the avoidance of doubt, this Disclaimer is binding against any recipient of this Report whatsoever.