Orion Protocol integrates high-security cross-chain bridges and virtual order books to improve trading efficiency, reduce costs, and provide a seamless user experience.
Author: @yelsanwong
Advisor: @CryptoScott_ETH
TL;DR
Orion aggregates liquidity and virtual order books, and integrates high-security cross-chain bridges to consolidate decentralized DEXs and centralized CEXs liquidity into a single access point, greatly simplifying the user's trading process and providing a seamless user experience.
Recently, Orion launched the Refer&Earn campaign to encourage influential individuals and loyal users to refer new users and provide corresponding incentives in the form of $ORN and reduced transaction fees. This reward-based referral mechanism not only rapidly increases the platform's user base but also spreads the Orion brand through the natural social networks of community members, achieving organic growth.
Orion recently launched the BRC20 cross-chain bridge, greatly expanding the functionality of the Orion protocol, enabling it to support token creation and exchange on the Bitcoin network, laying a crucial foundation for the expansion of the Bitcoin Financial (BTCFi) ecosystem. This development not only enriches the application scenarios and value of Bitcoin but also provides Orion with a unique opportunity to connect BTCFi with a broader decentralized finance (DeFi) ecosystem. Considering the rapid expansion of the Bitcoin ecosystem last year, we expect BTCFi to be a high-growth area, and Orion's cross-chain bridge solution is expected to achieve significant growth in this area.
1. Project Introduction
Orion Protocol was founded in 2018 with the initial goal of providing a unified, decentralized trading solution, connecting to all major centralized cryptocurrency exchanges (CEXs) and decentralized exchanges (DEXs) through a liquidity aggregator, allowing users to access the liquidity of the entire market on its decentralized platform to obtain the best prices for any token in the market.
Orion Protocol also aims to improve trading efficiency, reduce costs, and provide a seamless user experience through the integration of high-security cross-chain bridges and virtual order books. The core of the platform lies in its integration of decentralized market liquidity into a single access point, simplifying the user's trading process while maintaining the characteristics of high transparency, high security, and independence from intermediaries in DeFi.
In November 2023, Orion Protocol announced the rebranding of 'Orion Protocol' to 'Orion' to revitalize the protocol and provide a clearer and more targeted value proposition, while expanding the utility and potential of the ORN token.
2. Project Background
2.1 Team Background
Alexey Koloskov (Founder & CEO)
Before serving as the CEO of Orion Protocol, Alexey was the Chief Architect of Waves, where he successfully led the architecture design and development of Waves' decentralized exchange. Since June 2017, Alexey has been leading the project as the founder and CEO of Orion Protocol for over 6 years, responsible for formulating company strategy, overseeing product development, and driving innovation and growth of Orion Protocol in the blockchain industry.
Kal Ali (Co-founder & COO)
Kal Ali, an early strategic advisor and co-founder of Orion Protocol, currently also serves as a General Partner at Dominance Ventures, a venture capital firm that has participated in early investments in projects such as Cosmos, Gunzilla Games, and Avalanche.
2.2 Funding Status
3. Products and Business
3.1 Orion Terminal
Orion Terminal, as the core product of Orion Protocol, provides real-time access to and integration of order books from multiple exchanges through its unique liquidity aggregation mechanism. This mechanism covers a wide range of exchanges, including centralized and decentralized platforms, ensuring that users can obtain the best trading prices and depth across the entire market in a single interface.
This innovation not only provides users with optimized trading execution and pricing strategies but also effectively reduces trading costs and improves the overall efficiency of the market. The following is the implementation path of this mechanism.
3.1.1 deCEX Trading: Using CEXs in a Decentralized Manner
Through Orion Terminal, users do not need to create personal accounts in centralized exchanges, eliminating the need for personal KYC and other cumbersome procedures. By using an account established by Orion in CEX, also known as a liquidity node or liquidity provider, users initiate trades by sending them to the liquidity node through atomic transactions (which ensure that the trade is either fully successful or does not occur at all, with no intermediate state), and the node executes the trade on the CEX, immediately receiving the tokens. Unlike traditional DEXs that use the AMM mechanism, deCEX provides real-time order books, providing more accurate and immediate trading data.
Safe Deviation (SD) Mechanism:
While atomic transactions may ensure that trade requests are sent at ideal prices with the user's funds' security in mind, how does Orion ensure that users can complete trades at the best prices? To address this, Orion sets a Safe Deviation (SD) for trades.
In simple terms, SD is an automated preset trade slippage. In USDT trading pairs on CEXs, where most trading pairs have sufficient liquidity, the SD is set to 0; for non-USDT trading pairs on CEXs (such as ETH/BTC), a 0.4% SD is applied; for single swaps on DEXs, a 0.15% SD is applied, and for multi-step swaps, the 0.15% is multiplied by the corresponding number of steps. Throughout this process, Orion does not charge any additional fees beyond the actual commission and network fees calculated based on the order volume.
Unlike user-set slippage, although both SD and user-set slippage affect trade prices, SD, as a fixed and predefined mechanism, provides users with a certain degree of transparency and predictability of price changes.
Even in extreme market conditions, the system automatically takes measures to facilitate trades. Additionally, the SD mechanism may adopt different coefficients based on different market conditions (such as liquidity and volatility of trading pairs), providing flexibility and adaptability beyond what manually set slippage can offer, especially in cases of significant market price fluctuations.
However, the SD mechanism itself has certain limitations. For example, in a liquidity pool with insufficient reserves, a large trade may significantly impact the token price in that pool, and the 0.15% preset slippage may not be sufficient to address such changes, leading to the trade's failure.
Liquidity Node / Liquidity Provider:
During the trade execution process, Orion assigns orders to specific liquidity nodes through its virtual order book. To maintain the network's decentralized nature and improve efficiency, Orion has introduced the Delegated Proof of Liquidity (DPoL) mechanism.
Through this mechanism, liquidity nodes are required to stake ORN tokens to participate, with nodes with higher stakes being more likely to be selected to execute trades. However, the selection process considers not only the stake amount but also evaluates the types of tokens provided by the node, the blockchain network they belong to, and their reserve situation to ensure smooth trade execution.
DPoL also allows users to participate in decision-making by delegating ORN tokens to specific liquidity nodes, thereby influencing the selection of nodes. This process aims to balance the interests of users and nodes by allowing nodes to set transaction fees and share revenue with users, enhancing the network's decentralization and user participation.
Asset Security and Autonomy:
In terms of asset security and user control, Orion Terminal provides a mode for users to trade directly from their wallets. Through the liquidity aggregator, users are essentially the order delegators, and after creating orders through Orion, the aggregator interacts with liquidity nodes to facilitate the orders. Information such as the order address, trading platform, and order quantity for each order is publicly viewable and verifiable.
This mode reinforces the security of assets, ensuring that users' funds are always under their direct control, reducing the risk of fund theft and misuse present in traditional centralized exchanges. Even if Orion Terminal experiences a malfunction, the liquidity node network and smart contracts continue to operate normally, allowing users to continue participating in trading through Orion's liquidity and financial services.
This design embodies the core concept of decentralization, allowing users to trade securely and freely without the need to trust any third party.
3.1.2 Transmuted AMM Price Curves: Using DEXs in the manner of CEXs
Traditionally, decentralized exchanges (DEXs) such as Uniswap V3 use the Automated Market Maker (AMM) mechanism, which uses price curves to determine prices, unlike the order book-based trading method used by centralized exchanges (CEXs) that clearly list buy and sell orders for comparison and trading. The AMM price curves make it difficult to directly compare their liquidity with that of centralized exchanges.
The innovation of Orion lies in its transformation of AMM price curves into the traditional order book format, allowing AMM liquidity, such as that of Uniswap V3, to be displayed and compared in a manner similar to centralized exchanges like Binance or OKX.
This transformation not only makes price comparison easier but also allows for the placement of limit orders on AMMs, enhancing trading opportunities. Additionally, by converting AMM price curves into order books, Orion ensures that AMM liquidity can seamlessly integrate with and be compared to CEXs, creating a unified trading platform for users.
3.1.3 Virtual Order Books: Finding the Best Price Path by Combining DEXs and CEXs Order Books
Virtual Order Books (VOBs) combine the direct trading method of traditional order books (OOBs) and the liquidity model of Automated Market Makers (AMMs), creating a unified trading platform. VOBs not only display information for direct trading but also reveal potential liquidity advantages through multi-step swaps.
For example, trading token A for token C through an intermediate token (Token B). Continuously calculating complex swaps means that it can continuously update and optimize trading opportunities, providing traders with new and competitive prices, as well as arbitrage opportunities that may not have been discovered previously.
Combining these three key technologies, Orion Terminal undoubtedly represents an ideal form of liquidity aggregation trading products. However, its specific reliability and value discovery capabilities still await market validation.
3.2 Orion Bridge
Orion Bridge to some extent addresses the challenges of cross-chain transactions in the cryptocurrency market, achieving a truly efficient decentralized cross-chain bridge. The core of this technology lies in its integration, which directly embeds cross-chain and cross-exchange liquidity aggregation into the backend of Orion Terminal, providing users with a seamless, fast, and secure trading environment. Compared to existing bridges, Orion Bridge offers a trading experience without restrictions, delays, order rejections, fund lock-ins, or exploitation risks, largely addressing many of the issues present in other cross-chain bridges in the market.
Orion Bridge is supported by three core technologies: Atomic Swaps, Peer-to-Peer Network, and Broker Network. Atomic Swaps allow for instant exchange of assets on different blockchains without the need for wrapping assets or delays. P2P technology achieves true decentralization, enabling assets to be exchanged directly between individuals without the need for central institutions. The Broker Network ensures the immediacy and smoothness of transactions, regardless of the size of the trade.
In the first iteration of Orion Bridge, seamless connectivity between Ethereum and BSC has been achieved, and the BRC20 cross-chain bridge will be launched soon, allowing BRC20 tokens to be traded on EVM-compatible chains such as MATIC and BSC. It is worth noting that ORN is the only token listed on Binance with the concept of BTCfi.
3.3 Orion Pools
Orion Pools is a decentralized liquidity pool platform built on the Uniswap V2 model. The platform allows users to not only contribute liquidity and create new liquidity pools but also personalize their experience by adding custom logos, ensuring an active and vibrant trading environment.
The design philosophy of Orion Pools emphasizes empowering users, providing them with the ability to create, contribute to, and customize liquidity pools through a simplified user interface and process.
In terms of operations, Orion Pools provides intuitive guidance, allowing users to easily create new pools or contribute liquidity to existing pools. The process of creating a new pool includes selecting or adding new tokens, pairing them with USDT to ensure integration across the Orion platform, uploading token icons (for new tokens), and completing the transaction to confirm the creation of the new pool. The process of contributing liquidity includes selecting the preferred pool, inputting the amount of assets to contribute, and confirming the transaction through the wallet. These processes are not only user-friendly but also enhance the platform's liquidity and trading efficiency.
By contributing assets to liquidity pools, users not only facilitate seamless trading on the platform but also receive a portion of the transaction fees as a reward, creating a mutually beneficial relationship. Orion Pools not only provides opportunities to earn rewards but also allows users to become part of a broader trading ecosystem, enhancing their sense of participation and belonging.
With the implementation of the new governance and liquidity mining system, Orion Pools is transitioning to a more sustainable and growth-oriented model. The new system has been effective since December 5, 2023, emphasizing support for protocol growth and sustainability while ensuring alignment with user interests. This transition not only enhances the platform's attractiveness but also aims to attract more users to participate in the Orion ecosystem.
3.4 Orion Widget
Orion Protocol's Orion Widget is an innovative application designed specifically for cryptocurrency trading platforms and decentralized applications (dApps) developers. It aims to quickly enable token trading functionality on any webpage or app through a simplified integration process. The tool leverages Orion's centralized and decentralized exchanges (CEX and DEX) liquidity, allowing users to trade directly by connecting their wallets, thereby enhancing the convenience of trading and user experience.
The core advantage of Orion Widget lies in its high level of customization and ease of integration. Developers can customize the appearance and functionality of the Widget through a series of predefined parameters, including theme styles, default trading assets, tradable asset lists, initial trading amounts, and fee assets, to meet the specific needs of different platforms and user groups. This flexibility ensures that the Widget can seamlessly integrate into various web pages and app environments while maintaining brand consistency and user-friendliness.
Additionally, the integration process of Orion Widget is extremely simple, supporting integration through scripts and iframes, requiring minimal coding work. This significantly reduces the technical barriers, allowing even non-technical developers to easily deploy trading functionality on their platforms. This not only accelerates the development cycle but also reduces development costs, providing greater flexibility and scalability for projects.
In terms of token listing, Orion Widget supports hundreds of tokens listed by the Orion Protocol and ensures support for unlisted tokens through its extensive liquidity sources, further expanding users' trading choices. This feature is particularly suitable for projects that wish to offer specific token trading services on their platforms without worrying about liquidity or token support issues.
4. Growth Points
4.1 Refer & Earn for Rapid User Growth
Orion Protocol's Refer & Earn program is designed to expand its user base. Through this program, Orion encourages influencers and loyal users to refer new users to join, offering $ORN tokens as a reward incentive. Participants can apply to join this program by contacting @TradeOnOrion on Telegram.
Referrers can earn rewards of up to 70% or more based on the trading fees generated from their referrals, while the referred users can enjoy a 10% trading fee discount when trading on @TradeOnOrion. The rewards are distributed in real-time using the $ORN token on the BNB Chain. As the program progresses, more opportunities will be opened up for users who want to become referrers.
Furthermore, active referrers with a strong referral network and high trading volume can not only earn basic rewards but also have the chance to receive additional $ORN token rewards on the leaderboard. The leaderboard ranking is based on the trading volume within the network and the amount of ORN tokens in the wallet over a 14-day period. Orion adjusts the leaderboard budget monthly to temporarily increase referral rewards, which are distributed hourly and can be claimed on the BNB Chain.
This reward-based referral mechanism not only rapidly increases the platform's user base but also organically spreads the Orion brand through the social networks of community members, leading to organic growth. Community members directly benefit from their referral behavior, strengthening their loyalty and enthusiasm for the platform.
Additionally, the "Refer & Earn" program incentivizes users who trade through referral links with trading fee discounts, not only reducing their trading costs but also potentially attracting more trading activity to the Orion platform. With increased trading volume, the platform's liquidity will also be enhanced, attracting more users and traders, creating a positive cycle. Increased trading activity also enhances the platform's market competitiveness, attracting more projects and partners to pay attention to and join the Orion ecosystem.
By implementing a multi-tiered reward system, Orion encourages chain referrals among users, promoting long-term community activity and participation. Real-time reward distribution and additional incentives based on the leaderboard further increase the attractiveness of the program, stimulating active user participation. This long-term user engagement and community building are crucial for the stable growth and continuous development of the platform.
4.2 BRC Cross-Chain Bridge and Pioneer of BTCFi
According to OrdSpace data, there are currently as many as tens of thousands of BRC20 tokens with a total market value of over $20 billion, demonstrating the popularity of this market and the high demand for such assets by users. As a cross-chain bridge connecting Bitcoin and other blockchain networks such as Ethereum and BNB Smart Chain, Orion is one of the few infrastructures that support the BRC20 standard, giving it a first-mover advantage in the market and helping attract early adopters and investors.
Furthermore, by supporting the BRC20 cross-chain bridge, Orion can attract users and developers who want to explore new financial products and services on the Bitcoin network. This cross-chain functionality will significantly increase the liquidity and trading volume of the Orion platform.
The introduction of the BRC20 cross-chain bridge enables Orion to support the creation and transfer of interchangeable tokens on the Bitcoin network, providing an important foundation for the development of the BTCFi ecosystem. This not only increases the use cases and value of Bitcoin but also presents a unique opportunity for Orion to connect BTCFi with the broader DeFi ecosystem.
With the rapid development of the BTC ecosystem last year, we expect BTCfi to be a rapidly growing track, and Orion may have strong growth potential through its cross-chain bridge product.
4.3 Anticipated Airdrop for Orion Terminal
In September 2020, Uniswap announced an airdrop of its governance token UNI. All Ethereum addresses that interacted with Uniswap V1 or V2 before the airdrop deadline were eligible to receive at least 400 UNI tokens.
Drawing from Uniswap's airdrop history and success, if Orion Protocol considers implementing a similar airdrop strategy, several potential growth points and positive effects can be foreseen, including but not limited to attracting new users, promoting community governance and participation, increasing project exposure, acquiring new partners, obtaining valuable user feedback, and promoting its own technological improvements.
5. Token Economic Model
5.1 Token Distribution
5.2 Token Utility
5.2.1 Staking & Governance
Orion Protocol's Governance 2.0 represents a fundamental change in its governance mechanism, aiming to build a resilient future by enhancing community interaction and influence, creating a reward commitment, and ensuring that every participant can contribute to Orion's long-term success. The core of Governance 2.0 is the introduction of veORN (Vote-Escrowed ORN), a non-transferable token representing the locked ORN of users, equivalent to their voting rights and influence within Orion.
In the initial stage, veORN is primarily used for voting in liquidity pools, but its design is flexible and may expand to new governance capabilities as the Orion ecosystem develops. The veORN mechanism encourages users to increase their participation and influence in Orion's governance by locking ORN for the long term, strengthening community control over the platform's development direction.
Users can obtain veORN by staking ORN and selecting a lock-up period, further participating in Orion's governance process. The choice of lock-up period reflects the depth of the user's commitment to Orion's governance. A longer lock-up period can bring more veORN, thereby increasing the user's influence in governance decisions. This mechanism aims to reward users who have a long-term commitment to the Orion ecosystem, ensuring that rewards are proportional to the level of user participation and commitment through a carefully designed reward system.
At the same time, the veORN decay mechanism introduced in Governance 2.0 aims to incentivize continuous user participation in Orion's governance. Over time, veORN that has not been additionally staked or had its lock-up period extended will gradually decrease, requiring users to increase ORN staking or extend the lock-up period to maintain or increase their influence in governance. This design ensures the vitality and fairness of the Orion governance ecosystem, encouraging new user participation while rewarding existing users with long-term and active participation.
5.2.2 Reward Mechanism
As part of the Refer & Earn program, rewards are generated from the referrer's fee generation (weighted at 70%) and the user's ORN balance (weighted at 30%). A higher ORN balance can significantly increase the received rewards.
6. Risks
6.1 Cross-Chain Bridge Technology Security Risks
Cross-chain bridge projects in the DeFi space carry high risks, including security vulnerabilities and operational risks. As a cross-chain bridge project, Orion needs to prioritize these risks and implement appropriate security measures and risk management strategies to protect user assets and enhance community trust.
6.2 System Integration Risks
The Orion Protocol provides its unique liquidity aggregation service by integrating multiple decentralized and centralized exchanges, involving complex system integration work. While this integration provides users with extensive liquidity access and optimized trading experiences, it also brings system integration risks.
These risks may include technical compatibility issues, where different platforms' APIs and data formats may have differences that require careful adjustments and adaptations to ensure seamless integration. Additionally, maintaining the stability and reliability of this integration is also a challenge, as any updates or failures on any platform could affect the operation of the entire system. This highly dependent strategy on external platforms may be affected by policy changes or service interruptions from these platforms.
Therefore, while system integration brings significant advantages to Orion, such as richer liquidity and better user experience, it also requires continuous efforts from Orion to manage and mitigate these integration risks, ensuring the stability and security of the platform and protecting the interests of users from being affected.
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