Introducing V1 BOC Bonds
Bonds are now live on Bank of Cronos! We would like to express our thanks to the community for their patience while the team was working on these releases. We are excited to introduce the first slate of bonds planned, USDC bonds and BOC/USDC LP (Cronaswap) bonds. Once again these two bonds aim to achieve the first goals for the BOC protocol, increasing Treasury backing (USDC bonds), gaining protocol owned liquidity (LP bonds) and the beginning source of protocol revenue (bond sales + LP trading revenue).
Bonding Explained
A quick refresher on bonds, similar to the traditional financial instruments, purchasing Bonds involves the trading of a token to the protocol in exchange for BOC tokens. The protocol quotes an amount of BOC per trading token (bond principal token) and a vesting period (maturity) for the trade (currently set to 1 day/24 hours). It is important to know: when you purchase a bond, you are giving up your principal tokens (i.e USDC, BOC/USDC LP). The protocol compensates you with more BOC than you would get on the market, but your exposure becomes entirely to BOC and no longer to the token.
Purchasing a Bond
To purchase a LP bond, you must first add liquidity to the BOC-USDC Cronaswap pool.
Cronaswap is a decentralized exchange which utilizes automated market maker (AMM) smart contracts to allow users to open Liquidity Pools and provide liquidity. The first liquidity pool opened for the BOC tokens was on Cronaswap and it is currently used for trading. The liquidity providers earn the 0.25% trading fees on market transactions. In order to provide liquidity for the BOC-USDC pool users will have to deposit the same value of BOC and USDC tokens in the pool (matching the market price). For example in the below screenshot you can see a user depositing 0.5 BOC tokens and 5.58 USDC (worth 0.5 BOC tokens) to gain 51.9486 BOC/USDC LP tokens (disregard 18 decimal format on Cronaswap frontend).
Now with the LP tokens purchased, the user is not entitled to 0.1354% of the Liquidity Pool transaction fees. The BOC/USDC LP bond market on app.bankofcronos.com will quote a Bond price in LP tokens to earn 1 BOC token in 1 day (24hrs). See screenshot below, the bond price is greater than the market price for the liquidity tokens so users are not incentivized to purchase bonds. As with USDC bonds, the Bond price will decrease over time (similar to a Dutch auction) until it reaches its minimum price (near zero) or a user purchases a bond.
Next Steps for the Protocol
With the release of the BOC/USDC LP bonds the BOC protocol is set to achieve its bootstrapping goals, increasing protocol revenue and protocol owned liquidity. The team will now shift its focus to our next two goals, empowering the Bank of CronosDAO and testing/launching its first protocol Asteroid Finance.
DAO Plans
In the upcoming days we will release our initial plans for DAO contributors to earn BOC for their work and contributions. There will be a weekly DAO budget (in BOC tokens) and the community members can offer services for a portion of the budget (paid out weekly). We will release more details on this plan soon but we are also welcoming suggestions/ideas from the community in the discord. In the end the Bank of CronosDAO is owned by the community and not the current BOC development/marketing team. In order for the protocol to have sustained value going forward it will be up to the community to bring the DAO goals to life.
Asteroid Finance
While the DAO works toward self-sufficient contributions, the BOC core team will be working towards the testing and deployment of the Asteroid Finance protocol. We will be releasing more details in the coming days/weeks ahead but the aim is to allow Cronos users to lend their Cronos assets (CRO, ETH, BTC, BOC etc.) for a new Cronos stablecoin (CUSD). The protocol will allow only over-collateralized CUSD loans, so long as the value of the collateral is larger than the loan value. The loans will be interest free, with a small fee for opening a loan to allow for high capital-efficiency. As is standard for decentralized lending, once the value (via price oracles) of collateral falls below a threshold the loans will be automatically liquidated. There will be staking pools for CUSD to facilitate these liquidations and earn stakers a return(s) for their contributions.
We will be releasing more details on collateral threshold, staking pools and Asteroid Token whitelists in the coming days/weeks so stay tuned and follow all of our social platforms. The BOC core team appreciates the patience shown by the community as we work through our initial rollouts. We hope to continue to grow and work with the community members as we embark to the next phases of the protocol. Our vision hopes to see a fully decentralized DAO which manages, develops and legitimizes Bank of Cronos.
Authored By: NewageSage
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