OV is the proposed native token of Overlay Protocol. It is an ERC-20 token on the Arbitrum Mainnet. OV serves a dual purpose and will be used to participate in trading and DAO governance after launch.
OV may be used by holders to:
- vote on governance proposals of the DAO governing Overlay Protocol
- open positions on the markets offered on Overlay by using OV as collateral
To enter a position, a user of Overlay Protocol will lock OV into the Overlay smart contract as collateral/margin. A user could leverage this collateral on either side of any market offered by Overlay.
On closing a position, the position could either be profitable, unprofitable or at a break even. If the position is profitable, the protocol will mint OV tokens equivalent to the delta difference of the market between build and unwind. These tokens are added to the circulating supply of OV.
If the position is unprofitable, the protocol burns OV tokens of a value equivalent to the loss sustained. These tokens are removed from the circulating supply of OV. No tokens are minted or burned in case a position is closed at a break even.
Currently, Overlay Protocol is governed by Planck Cat DAO NFT and OV holders. One PCD NFT equates to 100,000 votes, while one OV token equals one vote within the governance structure. It's important to note that this equilibrium may be subject to change in the future. PlanckCat DAO is a DAO created for Overlay contributors to engage in protocol governance through PlanckCat (PCD) NFTs, and currently plays a central role in governance. Discussions are ongoing regarding the potential transition of governance responsibilities to OV token holders. These discussions are taking place within the appropriate channels on Discord and the Forum.
Total supply of OV is 800 million. The OV supply, by function, is dynamic. Thus, OV will be dynamically minted and burned by the smart contracts when positions are unwound by users.
Last updated on Dec 19, 2023