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Claims as Collateral: reOX vs. oUSD
Claims as Collateral: reOX vs. oUSD

Leveraging Bankruptcy Claims: Understanding reOX and oUSD as Collateral Choices

Peter avatar
Written by Peter
Updated over a week ago

At OPNX, we understand that flexibility is essential to address diverse claimant needs. We have engineered two distinct avenues to unlock value from claims - conversion to either reOX or oUSD. Let's delve into the distinctive features, benefits, and potential target demographics for each choice.

reOX: Locked OX as a Collateral Choice

Short for 'Reborn OX,' reOX serves as a unique collateral choice at OPNX. reOX tokens are locked OX tokens that cannot be withdrawn from OPNX. They unlock once the preference risk for a claim is settled. The amount of reOX allocated to a particular claim is normally equivalent to the current value of the claim according to OTC price live-feeds sourced from Claims Market. The available 100% bonus* which decreases linearly over a period of 12 months creates a unique incentive structure, encouraging claimants to take early action.

Benefits of reOX

1. Immediate Liquidity: By converting your claim into reOX, you acquire immediate liquidity, transforming your claim into eligible collateral in the OPNX credit system.

2. Bonus Incentive: The conversion comes with a 100% bonus at the beginning of a 12-month period*. This bonus reduces linearly to zero over the aforementioned 12 months, incentivizing early conversion.

3. Usable Collateral: reOX tokens serve as collateral at a 25% Loan-to-Value (LTV) ratio, thereby optimizing capital efficiency.

*Note that the bonus period for reOX runs from July 1st, 2023 at 12AM UTC to July 1st, 2024 at 12 AM UTC. Monthly decreases in the bonus take place at the beginning of each calendar month, at 12 AM UTC.

reOX Bonus

A critical feature of reOX is the 100% bonus incentive which decreases linearly over time. For instance, if you convert in the 1st month, the bonus would be 100% of your claim value. If you convert in the 6th month, the bonus would be 50%. By the end of the 12th month, the bonus incentive reaches zero, maintaining only the claim's intrinsic value. Example calculations are illustrated in the table below, assuming a claim size of $1 Million USD and a current OTC rate of $0.30 (30 cents on the dollar).

ReOX Conversion Bonus and Collateral Value Example

Month

Bonus

Multipler

Conversion Price*

Conversion Amount*

reOX collateral
@ 25% LTV*

1

100.00%

2.00

$0.600

$600,000

$150,000

2

91.31%

1.91

$0.574

$573,930

$143,483

3

82.62%

1.83

$0.548

$547,860

$136,965

4

73.93%

1.74

$0.522

$521,790

$130,448

5

65.24%

1.65

$0.496

$495,720

$123,930

6

56.55%

1.57

$0.470

$469,650

$117,413

7

47.86%

1.48

$0.444

$443,580

$110,895

8

39.17%

1.39

$0.418

$417,510

$104,378

9

30.48%

1.30

$0.391

$391,440

$97,860

10

21.79%

1.22

$0.365

$365,370

$91,343

11

13.10%

1.13

$0.339

$339,300

$84,825

12

4.41%

1.04

$0.313

$313,230

$78,308

13

0%

1.00

$0.300

$300,000

$75,000

*Note that the given example assumes a claim size of $1 million USD and a current OTC claim price of $0.30 (30 cents on the dollar).

reOX is ideal for claimants and traders looking for immediate liquidity and an opportunity to leverage their claims. The early conversion bonus incentive also makes it an attractive choice for those who wish to maximize their claim value, albeit with a higher risk tolerance associated with OX price fluctuations.

oUSD: A High Leverage, Stable Credit Currency

oUSD serves as the on-platform credit currency at OPNX. Designed to address specific challenges in the cryptocurrency lending space, oUSD stands as a promising alternative to reOX for claim conversion providing a reliable, dollar-denominated collateral.

Benefits of oUSD Conversion

1. Relative Stability: Although oUSD is not directly pegged to the U.S. dollar, it keeps a close value correlation with it. This near-stable value is due to its redemption mechanics where oUSD can be swapped or redeemed for USDT, a stablecoin that is pegged 1:1 with the U.S. dollar.

2. Maximized Credit Potential: oUSD offers claimants an opportunity to realize a 100% Loan-to-Value (LTV) ratio against their claims. This advantage allows claimants to fully leverage their assets, enhancing their credit capacity on the platform.

3. Expanded Functionality: oUSD is the currency used for margin and Profit and Loss (PNL) for all futures contracts on OPNX, giving you a wider range of trading possibilities. It can also be staked in the oUSD vault for a floating yield, offering a lucrative opportunity to earn from idle assets.

Suppose you're holding an FTX claim worth $1,000,000. The current OTC price for FTX claims is $0.30 on the dollar. Thus, upon conversion, your claim's value translates into $300,000 in oUSD. This is illustrated below:

FTX Claim Value

OTC Price

oUSD Equivalent

$1,000,000

$0.30

$300,000

Once the conversion is complete, the oUSD resides in your OPNX account, ready for use as per your trading strategy. Now, let's explore some potential scenarios:

  • Trading Margin: You could use oUSD as margin for futures contracts on OPNX. This flexibility allows you to leverage your claim value for potentially profitable trading scenarios.

  • USDT Redemption: If liquidity is your priority, you can choose to redeem oUSD for USDT. The swap occurs at a 1:1 ratio, which means you could potentially redeem your $300,000 worth of oUSD for an equal amount of USDT.

  • Staking in oUSD Vault: For a less active strategy, consider staking your oUSD in the OPNX oUSD Vault, which offers a floating yield. This way, your oUSD balance can grow over time, even as it remains readily available for any trading needs that may arise.

The oUSD conversion choice is geared towards futures traders and claimants who prefer near-stable value and the ability to fully mobilize their claims. This option is especially beneficial for those looking to maximize their credit potential and utility on the platform, while taking advantage of the floating yield opportunity offered by the oUSD vault when staked.

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