In the ever-evolving world of decentralized finance (DeFi), the journey to bridge real-world assets with blockchain technology has been a long-standing ambition. The "Own Protocol" is here to turn that ambition into reality. Here is the master plan for the world’s first fully decentralized on-chain protocol for direct exposure to real-world assets.
The Vision
To create a decentralized financial ecosystem where anyone can access, trade, and earn yield from tokenized real-world assets like stocks, commodities, fiat, and other liquid instruments — all backed by a trustless, transparent, and automated system.
- Borderless Finance: A global financial ecosystem unshackled from intermediaries, empowering individuals regardless of their location.
- 24/7 Accessibility: Access to assets beyond market hours or regional restrictions.
- Fractional Ownership: Breaking barriers to entry by allowing smaller investments in traditionally high-value assets.
- Increased Liquidity: A seamless flow of capital across traditional and decentralized markets.
- Programmable Yield: Automating yield generation tied to the performance of real-world assets.
How Own Protocol Works
User Staking: Users stake stablecoins (USDC) into asset-specific pools. Each deposit generates a pool position for the corresponding real-world asset. For example, staking $1,000 USDC in the Tesla pool mints 1,000 xTSLA_USDC tokens, backed by equivalent Tesla shares held by an LP.
xToken Mechanics: Similar to Aave’s aTokens, xTokens represent a user’s claim on staked assets. Their value scales with the underlying asset’s performance, and users can trade them on secondary markets. Unlike aTokens which accrue only positive yield, xTokens can accrue negative yield as well.
Liquidity Providers (LPs): A decentralized network of LPs, operating protocol-specific nodes, fulfills the pool positions generated by user stakes on traditional exchanges. LPs use their own capital to hold positions that mirror the asset pools’ stakes. User funds remain securely within the protocol, earning yield through lending platforms like Aave. When users initiate unstaking, LPs sell the corresponding positions and reconcile profits or losses with the protocol on a weekly basis.
LP Staking and Governance: To participate, LPs must stake Own tokens, which grant them the ability to run protocol nodes. These nodes automate critical functions such as processing pool positions, exchange trading, and profit/loss settlements. To ensure compliance and security, zero-knowledge (ZK) proofs validate that LPs maintain the required positions. Failing to adhere to protocol rules results in LP stake slashing.
Yield Dynamics:
- For Users: Yield is directly tied to the performance of the underlying asset (e.g., Tesla’s stock price), providing users with exposure to the asset.
- For LPs: LPs earn multiple streams of revenue, including stablecoin yields from the staked assets in the protocol, LP fees, and staking rewards in Own tokens. This multi-faceted earning model incentivizes LP participation and ensures protocol sustainability.
Why Own Protocol Matters
Traditional finance has thrived on exclusivity and intermediaries, but the future demands openness, fairness, and efficiency. Own Protocol is not just another DeFi protocol; it’s the first step in democratizing access to global financial markets.
The Master Plan
- Build the first pool backed by a real-world asset to validate the MVP.
- Create a protocol enabling anyone to launch pools for any asset.
- Scale the protocol to every liquid real-world asset.
"Don’t tell anyone."
Credits: This post is inspired by Tesla Master Plan by Elon Musk.
To know more about the protocol, read our docs or join our discord.