Litepaper
v1.0
Ojo Network: Economic Security for DeFi
Litepaper - v1.0
1. Overview
The Ojo Network is a decentralized risk intelligence layer that provides Economic Security for DeFi. Inspired by EigenLayer's model of Actively Validated Services (AVSs) in the consensus layer, Ojo applies this framework to the realm of collateral pricing and risk modeling. By turning Risk Engines into AVSs, Ojo enables protocols to safely consume price and risk data that has been vetted, staked behind, and continuously evaluated by a decentralized network.
2. Problem Statement
DeFi applications that rely on oracles and leverage mechanisms (e.g., lending protocols, AMMs, structured products) are critically vulnerable to:
Inaccurate or manipulative oracle prices
Rigid or misaligned risk heuristics
Black-box risk model governance
Poor performance during market volatility
These failures result in liquidations, insolvencies, and systemic DeFi risk.
3. The Ojo Solution
Ojo provides a modular middleware layer between oracles and leverage protocols. Risk Engines ingest raw oracle feeds and apply curated heuristics to output more conservative, context-aware prices.
Each Risk Engine becomes an AVS within the Ojo Network. The network provides:
Heuristic flexibility: Risk Engines can encode domain-specific logic (e.g.,
min(TVWAP, Linear Rate)for Pendle).Staking-based accountability: Economic actors stake behind engines to ensure honest behavior.
Reputation scoring: Historical performance of each engine is logged and scored.
Protocol composability: Lending, LPs, and yield strategies can plug into different Risk Engines as needed.
4. Network Design
4.1 Actors
Risk Engines (AVSs): Code modules that process oracle feeds and produce risk-aware prices.
Curators: Entities that propose, run, and maintain Risk Engines. They may be teams like Gauntlet or DAOs.
Stakers: Users who stake into specific engines or curators, earning yield and risking slashing.
Protocols: DeFi apps that consume Ojo-validated prices to enhance collateral safety.
4.2 Performance-Based Accountability
Ojo continuously measures:
Deviation from market prices
Impact on protocol safety (e.g., liquidation outcomes)
SLA adherence (e.g., update frequency)
Peer divergence across engines
Poor performance leads to:
Slashable events
Reputation loss
Engine deactivation
4.3 Dispute and Challenge Mechanism
Ojo enables permissionless challenges of risk output:
Stake-backed disputes
Resolution via consensus, proof, or governance
Incentivized honesty through reward/slash dynamics
5. Staking System
5.1 What Is Staked
Primary: Native OJO token
Alternative: ETH, LSTs (e.g., stETH), or protocol tokens (weighted by risk-adjusted value)
Hybrid Model: Multi-asset staking with dynamic collateral weighting
5.2 Rewards & Slashing
Yield from protocol usage flows to stakers
Misbehavior leads to partial or full slashing
Challenge initiators are rewarded for valid slashes
6. Integration Examples
Lending Protocols use conservative prices to protect against insolvency
RWAs require custom Risk Engines to encode off-chain event heuristics
Derivatives platforms use dynamic volatility-aware Risk Engines for liquidation safety
7. Roadmap
Phase 1: MVP Risk Engine and Registry
Initial integrations
Basic curator/staker model
Phase 2: Challenge/dispute module and performance metrics
Launch of performance scoring dashboard
Risk Engine rating system
Phase 3: Full staking and multi-asset support
Tokenomics rollout (OJO token)
Protocol incentives and SLAs
9. Revenue & Scalability
9.1 Revenue Model
The Ojo Network introduces multiple scalable revenue streams:
Risk Engine Fees: Protocols pay fees to consume validated, risk-aware pricing from Risk Engines. Fees may be flat, usage-based (per asset, per call), or volume-based (TVL secured).
Staking Yield Fees: A portion of staking rewards is routed back to the protocol treasury for operating the network and securing data integrity.
Challenge & Dispute Market Fees: Participants pay small fees to initiate disputes or resolve risk model disagreements. These are partially burned or redistributed.
Engine Listing & Registry Fees: Curators may pay a one-time or ongoing fee to list new Risk Engines in the network registry, especially in higher-risk categories like RWAs or long-tail assets.
9.2 Scalability
As more DeFi protocols plug into Ojo:
The demand for diverse Risk Engines grows, creating a marketplace dynamic with long-tail growth potential.
Curators and stakers scale horizontally, similar to validator markets — new participants bring compute and capital without centralized overhead.
The OJO token's value accrues from increased staking demand, governance influence, and yield capture across more integrations and higher-value collateral classes.
This design enables Ojo to:
Scale across chains and rollups (via oracle bridging or shared sequencer access)
Expand into emerging asset types (LRTs, RWAs, perps, etc.)
Monetize network activity without vertical control or centralized operation
10. Conclusion
Ojo is building the risk-aware, economically-secured foundation that DeFi needs to scale safely. By creating a decentralized network that actively monitors, incentivizes, and verifies collateral pricing logic, Ojo becomes the trust layer for all things leverage, collateral, and structured risk.
Protocols no longer have to trust one oracle or one model — they trust the network.
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