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Bonds arrive in crypto with Ethernity Cloud
Great innovation in the crypto ecosystem! Ethernity Cloud is introducing bonds, offering a new source of financing for Web3 project owners. For investors, this is a new way to earn money through cryptocurrencies. What are these bonds and how do they work? The answer follows.
Reserve bonds: what are they?
Reserve Bonds are financial instruments designed to provide projects with alternative solutions to generate sustainable liquidity. With these tools, investors who believe in the project can generate profits by purchasing tokens at an initial price lower than the market price. The goal of this innovative initiative is to help projects enjoy long-term health by diversifying their funding sources. The advantage for investors is that the price of these Reserve Bonds varies depending on market conditions and the value of the underlying token.
Reserve bonds: how do they work?
As soon as a user buys a bond, he receives tokens that he acquires over a certain period, represented in the wallet by the bond’s NFT. In other words, once they acquire the bond, they receive the tokens incrementally according to a well-defined schedule. They can then request these tokens as soon as they receive them. The uniqueness of this model is that the price of bonds is proportional to demand and inversely proportional to elapsed time. More clearly, four main factors jointly influence the price of these bonds. These are:
- The entry price of the liquidity provider token;
- The price of the exit token;
- The time elapsed since the last bond purchase;
- The demand for bonds.
The combination of these four factors allows you to establish a discount on the exit token to ensure the competitiveness of the bonds. Therefore, if you buy the token today at price P, you will not get it tomorrow at the same price. This discount system is at the heart of bond yields.
How does the Ethernity Cloud bond discount work?
Suppose the price of the exit token increases. If the value of the input token decreases or remains unchanged, the discount on the bond will increase. In fact, the exit price is higher while the price of the entry token has decreased or remained the same. With the two values diverging, the discount will be significant.
Now suppose that the price of the exit token decreases. If the value of the input token increases or remains unchanged, the bond will see its discount decrease. This is because the exit token will be purchased at a smaller discount, since it is worth less and the value of the entry token has increased or remained the same. The discount will be reduced because the two prices converge towards each other.
In the event of a negative discount, it will still be possible to purchase bonds and receive the NFT bond. However, the downside is that these exit tokens will be worth more than the market value.
It should also be noted that bonds are purchased through individual assets. Since the Ethernity Cloud mainnet is on Polygon, where most of the project’s community does their transactions, this is the MATIC token.
In summary, the reserve bonds introduced by Cloud of eternity they represent a major advancement in the crypto ecosystem. They offer a new path to sustainable financing for Web 3 projects, while allowing investors to profit from cryptocurrency market fluctuations. This innovative mechanism is based on a combination of factors, including the price of the entry and exit tokens, the time since the last purchase of the bonds and overall demand. Therefore, these bonds contribute to the long-term financial health of projects, while offering investors the opportunity to diversify their portfolios. With bond purchases made across unique assets on the Polygon network, this initiative opens up new perspectives in the realm of decentralized finance.
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Luc Jose A.
Graduated in Science Po Tolosa and holder of a blockchain certification consultant issued by Alyra, I returned to participate in Cointribune in 2019. Capturing the potential of blockchain to transform numerous sectors of the economy, I have made a commitment to raise awareness and inform the great public about this constantly evolving ecosystem. My goal is to allow anyone to better understand blockchain and learn about the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to convey the latest technological innovations and to put into perspective the economic and social efforts of this revolution in brands.
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