Bond rates under the YFI protocol

Hello,

I am new to crypto and have been wondering how I can contribute. I don’t understand why yearn could look to release a form of an issuance bond out that has a considerably lower APY at a fixed rate to hedge other market risks. From researching, I see this bond market currently in crypto is very bad, and I have an idea to put together a corporate issuance bond from yearn. I like to call it a Protocol bond. I think there is a way to do this. Introduce a uniquwe bond market and crypto and secure the returns for people. If you think this is even possible or are interested tp hear my proposal, please lmk. I think this could be another layer for both yearn and in the larger picture, crypto.

5 Likes

This is a great idea, I would love to see you develop this further. Do you need me help? I also have some insurance contacts that I’ve been discussing ILS crypto products with.

2 Likes

Think Yearn would be in a great place to do something like this. Curious to hear ur proposal. Especially if it could be used as a hedge.

2 Likes

I think that’s the thought. It could maybe be a safeguard hedge as well as introduce a strong framework for a tradeable bond market into crypto.

Inspired by Basis and its predecessors, a multi-token protocol that consists of three tokens: (the algorithmic stablecoin), Shares (or sBDO, which holders can claim BDO inflation when the network expands), and r Bonds (or, which can be purchased at a discount rate when the network is in contraction and can be redeemed for BDO when the network comes to its deflationary phase and price goes below 1$).

Below is the explanation of how Dollar mechanisms work:

trades below the $1 target price

When the price is below the target price of $1, token holders can purchase Dollar Bonds with an extra discount, and Bonds are burnt to reduce the circulating supply when users redeem Dollar with a 1:1 ratio.

In case of redemption, an amount of BDO will be minted to equal the Dollar Bonds redeemed. Important to note is that Bonds have no expiry after purchase.

trades above the $1 target price

When the price is above the 1$ peg, the token supply will have to expand to push it back down to 1$, and the contract will allow the redemption of the Dollar Bonds.

When Dollar’s price continues trading above the $1 target price after bond redemption, the contract mints an appropriate amount of new BDO and distributes it to the Boardroom Stakers.