Bonds — a financial instrument popular among classic investors — are finally hitting the cryptocurrency market with decentralized bonds available for a wide category of users.
Blockchain platform DeBond revealed the launch of an innovative protocol allowing any crypto user to create their own digital asset bonds that were previously unavailable to DeFi traders. The new solution is based on collateralized debt obligations that make it possible to turn any digital asset into a bond via an accessible and straightforward interface mechanism. Each bond corresponds to a specific loan agreement, and users have the option of splitting and bundling the digital assets as bonds for facilitating trading in the secondary market.
Considering the fact that bonds are an important tool within any economy, giving companies and governments access to liquidity, the possibility of issuing such instruments on the decentralized market is an important step to bringing it in line with traditional markets. The DeBond project seeks to give DeFi market participants the opportunity of automatically issuing digital asset bonds via the proprietary ERC-3475 standard.
The ERC-3475 standard implies the issuance of Multiple Callable Bonds, whereby each is assigned to a unique algorithm and does not require the deployment of additional smart contracts. This allows the new standard to be used for creating both traditional bonds and financial derivatives like futures and options.
“Bonds have traditionally been seen as an instrument of governments and major corporations. But the market is evolving and the digital industry, with its flexibility and orientation at users with low-entry thresholds, must have such instruments available to anyone. Unlike traditional bonds that rely on the credit endorsement of a single agency, we use the underlying assets controlled by the smart contract and the community to ensure the fulfillment of repayment,” as Yu Liu, the founder and CEO of DeBond commented on the launch of the project’s core product.
Apart from providing digital asset collateralization, the DeBond ecosystem also gives users access to the DeBond Wallet, which is an extension to regular ERC-20 wallets like Metamask, allowing for the centralized display of all ERC-3475 assets. Another service of the DeBond ecosystem is the Decentralized Bond Exchange, which facilitates transactions with bonds using a Dutch auction.
The DeBond team is confident that the launch of its innovative solution will give DeFi market participants more options for capitalizing on digital assets and meet the growing demands of both private and corporate members of the market.