The World’s First Decentralized Bond Market Has Arrived
January 17 2022 - 1:04AM
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By 2021, Statista found that there were over nearly 6,000
cryptocurrencies in existence, a staggering increase from the
handful of digital tokens in 2013. With the rapidly evolving and
expanding cryptocurrency industry, It’s no wonder that the amount
of tokens has been skyrocketing. Alongside the rise in tokens,
there has also been an acceleration in the number of investment
platforms within the cryptocurrency ecosystem. Although there are
many platforms, many come with issues, including lock-up periods,
lack of transferability from platform-owned wallets, and large
transaction costs. Additionally, being a liquidity provider in the
Ethereum network, withdrawal fees can significantly take away from
the profits investors are receiving. As the industry continues to
reach new heights, technology is adjusting and evolving to keep up
with the changing needs of the market. One platform that is
addressing some of these issues is SuperBonds, the very first DeFi
bond market. It’s built on Solana, a blockchain that operates
without the traditionally high fees. Bonds allow investors to loan
borrowers, like companies or a government, who use the cash towards
funding their operations, while the investor receives interest on
the investment. They are a popular investment choice, especially in
traditional finance, as they are typically a low-risk option and
return on average around 5% annually. They are commonly invested
into diversified portfolios as they offset riskier investments,
however, they often come with hefty fees. SuperBonds allow DeFi
investors to buy bonds and have a guaranteed return in $USDC. It
also allows users the freedom to store their investment in
whichever wallet they want; they can self-custody it in any wallet
of their choosing. SuperBonds circumvents the high transaction
costs by making use of the low-fee Solana network. Additionally,
many CeFi (centralized finance) products in the cryptocurrency
space today inherently require funds to be stored within the
platform in order to generate yield, however, DeFi (decentralized
finance) has provided an alternative to this. “With CeFi crypto
products today, there is the hidden risk of fund storage on a
platform to generate yield, which many DeFi products solve.
However, with DeFi protocols, there is uncertainty in terms of the
terminal value, thus rendering collateralization prospects slim for
the user’s LP tokens,” the company states in a blog post.
SuperBonds eliminates these issues by enabling bonds with certain
end-values that the user can self-custody—meaning users have
possession of their digital assets because they control the private
key. To simplify the bonds market, the platform issues bonds as
NFTs which can be redeemed anytime for a fixed yield, and can then
be settled by any end-owner holding the NFT. The platform also
offers bond underwriting, allowing investors to park their
investments in a fixed-income bond, with Bond Underwriters taking
the other side of the trade. These liquidity providers send capital
to the trader’s pool to create the maximum interest possible for
traders. SuperBonds also offers staking for those to yield rewards
for holders. 60% of the total emitted tokens are reserved for the
protocol rewards and the different participants receive rewards in
SB tokens. Bond underwriters can stake their LP tokens as well as
any SB token holder can stake SB tokens to earn more rewards. A
portion will accrue towards flexible rewards for bond buyers, and a
residual stream will accrue to the Treasury. Investing in bonds is
a popular traditional investment choice, but high fees and
restrictions have created barriers for investors. Thanks to
SuperBonds, investing in bonds can now provide crypto investors
with not only more flexible yield opportunities, but at a lower
fees.
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