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What is Bond Protocol?
Bond Protocol is a suite of products to support sustainable treasury growth for crypto projects. It consists of a permissionless bond marketplace and options system.
- Permissionless Bond Marketplace: Ethereum, Arbitrum, and Optimism
- Options Liquidity Mining: Ethereum and Arbitrum
The platform offers tools that empower projects to manage their treasuries and incentivize participants efficiently. Bond Protocol addresses two primary inefficiencies in the crypto industry: limited options for treasury diversification and high sell pressure from token distribution mechanisms.
The mission of Bond Protocol is to revolutionize the crypto industry by offering tools that empower projects to overcome treasury management challenges. By providing solutions for diversified treasury, asset acquisition, and emissions management, Bond Protocol aims to change how projects operate.
Bonds allow protocols to issue vested tokens to acquire assets quickly. Bonders exchange a quote asset for a vested payout asset at a specified discount and future date. The bond market parameters can be configured according to the issuer’s needs to maximize versatility for asset acquisition.
Bond markets are fully permissionless and can be deployed by anyone, including individuals, DAOs, protocols, VCs, and funds. They are open to any user interested in exchanging a market’s quote asset for the vested payout asset.
Bonds provide a streamlined approach to acquiring assets for projects at any stage of maturity. They are suitable for diversification, liquidity ownership, emissions management, acquiring strategic assets, and fueling growth initiatives.
Bonds require minimal technical overhead and can be deployed in minutes using the permissionless dApp provided by Bond Protocol. External sources such as DeFiLlama and IQ.wiki are used to display protocol and token details automatically.
Protocol Owned Liquidity (POL) ensures liquidity during market conditions and transforms liquidity into a sustainable revenue source. POL can be acquired using both Bonds and Options Liquidity Mining. POL contributes to a project's growth and revenue by accruing LP fees with every swap transaction.
Bonds allow protocols to introduce their native token as the payout token and acquire quote tokens without affecting their treasury stability. This approach mitigates risk, enhances stability, and provides agility in managing funds.
Issuers can choose between Fixed-Term Bonds, where tokens are claimable after a chosen duration, and Fixed-Expiry Bonds, which vest at a predetermined date. These options cater to different project needs and token dynamics.
Bonds can be auctioned through Sequential Dutch Auctions (SDA) or Fixed-Price Auctions. SDA operates with regulated pricing and discount speed, while Fixed-Price Auctions allow issuers to set a fixed price for tokens.
Options Liquidity Mining is a product that allows projects to mint ERC-20 call options (oTokens) as incentives. These options are used for various purposes and parameters like quote asset, payout asset, strike price, epoch length, and eligibility window can be configured.
OLM offers more control and flexibility in designing incentive programs compared to traditional incentives. oTokens can be exercised within specific dates and at fixed strike prices, providing projects with efficient asset acquisition methods and recipients with a novel way to engage.
oTokens acquired through OLM provide a cost-effective approach for token emissions. Instead of distributing incentives without receiving anything in return, issuers can acquire assets when oTokens are exercised, channeling value back to the treasury.
Issuers can diversify their treasuries by acquiring various assets like stablecoins, ETH, LP tokens, or strategic assets. This approach enhances financial stability and offers flexible treasury composition management.
oTokens have a defined eligibility window during which they can be exercised. This period provides recipients with the context of when their opportunity to exercise will be available and when it will expire, ensuring informed decision-making.
Yes, OLM supports both long-term and short-term strategies. Depending on the chosen quote asset and strategy, issuers can configure oTokens for various epochs and strike prices, catering to different project objectives.
Recipients of oTokens can exercise them within the eligible and expiry dates at a fixed strike price. Exercising results in obtaining the upside payout (option price minus strike price), while the issuer recoups the quote asset strike price required for exercise.
For expired or unexercised options, the issuer can reclaim the payout collateral initially provided to mint the oTokens. This prevents the need for the issuer to pay out liquid incentive tokens and shares the upside between the issuer and exercising purchasers.
Quote tokens in OLM vary in breadth and depth, offering a range of options for issuers. Base assets like stablecoins provide simplicity and stability, while community assets like LP tokens strengthen protocol growth. Strategic and niche assets are more advanced and tailored to specific project needs.
oToken pricing depends on the chosen quote asset and its characteristics. For stablecoin quote assets, pricing behaves like a normal option. For volatile quote assets like ETH, the fluctuating values of both payout and quote tokens impact the effective strike price.
Epoch lengths impact the activity level of oToken recipients. Shorter epochs are suitable for active recipients, offering rapid experimentation, while longer epochs are more passive.
oToken eligibility is customizable in OLM. American-style options provide instant eligibility, while European-style options become eligible only on the expiration date. Protocols can adjust the eligibility window to align with their objectives and LP needs.
No, oTokens issued within an epoch are fungible (ERC-20) within that epoch but not across epochs. This approach encourages oToken recipients to exercise their options rather than trade them.
OLM can be directed to replace common emissions sources like liquidity mining, bribes, asset management, and more. By utilizing oTokens, protocols align incentives with project goals, enhancing efficiency and value circulation within the ecosystem.