The First Decentralized Bond Market in the World Has Arrived – What You Should Know
Statista, a company that specializes in consumer and market data, learned in 2021 that there were more than almost 6,000 different cryptocurrencies in existence. This figure is appalling when compared to the handful of cryptocurrencies that existed back in 2013. There has been an incredible increase in the popularity, adaptation, and value of cryptocurrencies. So, perhaps it shouldn’t be surprising that so many new digital tokens have started to release. The growth hasn’t come without its issues. There have been quite a few problems among crypto investment platforms, which have inconvenienced various investors and users. However, the platform, SuperBonds, seems to be addressing these problems as the first decentralized bond market in the world. Thus, this article discusses more about this decentralized market and how it can help solve problems for several investors.
The Problems Prevalent Among Crypto Investment Platforms
In addition to the increase in the number of digital tokens, there has been considerable growth in the number of investment platforms that are a part of the crypto ecosystem. While there may be several investment platforms, all of them aren’t great. Some of the most common problems among them include the inability to transfer tokens from wallets owned by the platform, lock-up periods, and significant transaction costs.
Moreover, those platforms that are liquidity providers in the Ethereum network may incur withdrawal fees that can greatly reduce the profits that investors receive. Therefore, that may reduce some investors’ incentive to invest in crypto.
The Introduction of SuperBonds, the First Decentralized Bond Market in the World
There’s no doubt that the crypto industry has continued to reach new heights, and the rapid growth has led to technology evolving and adjusting to consistently facilitate and address the changing requirements of the market. One of those positive evolutions comes in the form of the first decentralized bond market in the world, SuperBonds. SuperBonds is a DeFi (decentralized finance) investment platform that has started to address some of the issues mentioned above. The decentralized bond market is developed on a blockchain called Solana that works without the high fees that are otherwise common. So, for those who don’t know, decentralized finance simply means that it provides financial instruments without the need to rely on any intermediaries, such as exchanges, brokerages, or banks. It uses smart contracts on a blockchain instead.
Bonds enable investors to offer loans to various types of borrowers, such as a government or companies, who aim to use the loan to fund their operations. In return, the investor can earn interest on the investment. In traditional finance, particularly, bonds are a popular investment choice for many. This is because bonds are generally a low-risk option and offer satisfactory returns, averaging at about 5% every year. Many investors typically invest bonds in diversified portfolios in an attempt to offset riskier investments. That said, there are often hefty fees with doing that.
What SuperBonds Has to Offer to Investors
SuperBonds function similarly to traditional bonds. Thus, it allows DeFi investors to purchase bonds and earn guaranteed returns in $USDC. In addition to that, it provides users with complete freedom about which wallet they want to store their crypto investments. Thus, investors can self-custody their holdings in a wallet of their choosing. What is perhaps a noteworthy feature of SuperBonds is that it significantly reduces the typical high transaction costs related to crypto investments. It manages this by using the Solana network, which is relatively low in fees.
SuperBonds Issues Bonds as NFTs to Solve a Prevalent Problem
Today, several CeFi (centralized finance) products in the crypto ecosystem need require funds to be stored within a platform to generate yield. That is not the case with decentralized finance, however.
The company has discussed this in greater detail. A representative discussed that CeFi crypto products entail a hidden risk of storing funds on a platform to generate yield. On the other hand, many DeFi products have solved this issue. That said, DeFi protocols include a certain level of uncertainty in the terminal value. As a result, the protocols reduce the collateralization prospects for users’ Liquidity Provider (LP) tokens.
SuperBonds gets rid of these problems by assigning specific end-values to bonds that users can self-custody. What this means is that users have complete possession of their digital assets, i.e., their crypto holdings, because they have the private key. What’s more, is that the platform issues bonds as nonfungible tokens (NFTs) to simplify the bonds market. Users can redeem these NFTS at any time for a fixed yield, and the end-owner that holds the NFT can then settle the yield.
SuperBonds Provides the Opportunity for Bond Underwriting
SuperBonds also provides the opportunity for bond underwriting. Therefore, investors are able to park their investments in a bond with a fixed income, and bond underwriters take the other end of the trade. These liquidity providers transfer capital to the trader’s pool in an attempt to generate the best possible interest for traders.
The platform is also known for offering the chance to stake so that holders can yield rewards. 60% of all emitted tokens are kept aside for rewards. Thus, participants of staking can earn rewards in Snowbank SB tokens. In addition to that, SB token holders can stake their SB tokens to earn even more rewards than otherwise. Also, bond underwriters can stake Liquidity Provider (LP) tokens. A portion will accumulate toward flexible rewards for those who buy bonds, and the Treasury will accrue a residual stream.
Last Few Words
It’s common practice for people to invest in bonds, but the process often entails high fees, which have restricted some investors. That said, SuperBonds, the first decentralized bond market, changes things up, as it offers the opportunity to invest in bonds and simultaneously offers crypto investors with flexible yield opportunities than before, and all of that is at a lower cost.
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