While bonds have existed for many decades, one new crypto project is arguing that this asset class hasn’t made its way to the world of decentralized finance yet.
Major economies around the world are on the brink of a recession — and ongoing uncertainty means the outlook for the next 12 months is pretty gloomy.
The investment bank Nomura recently predicted that America, the eurozone, the United Kingdom and Japan are all at risk of a recession as inflation continues to spiral.
Stocks have taken a battering, and the crypto markets have not been spared. But during times of turmoil, bonds tend to look more attractive.
Bonds are effectively debt instruments — an IOU. They can be issued by governments and companies, and held by the public.
Interest is paid on a regular basis, and the bond’s nominal value is subsequently paid out when the maturity date is reached.
While bonds have existed for many decades, one new crypto project is arguing that this asset class hasn’t made its way to the world of decentralized finance yet. Why? Because most DeFi projects rely on ERC-20 tokens that cannot define specific contractual terms — such as coupon rates and maturity dates — attributes that are essential to bonds.
D/Bond says it has established a new type of token standard, ERC-3475, to overcome these technological hurdles and ensure that securities can be issued and traded on the blockchain.
In future, it believes that this opens the door for anyone to create their own bonds — and the platform will allow them to be traded through a bespoke decentralized exchange.
Users can subsequently store ERC-3475 tokens in the D/Bond Wallet.
A decentralized bond ecosystem
D/Bond’s CEO Yunan Liu told Cointelegraph: “The ERC–3475 is a unique and a significant improvement to what the traditional finance (TradFi) system offers right now. It helps us bring together much of DeFi’s potential to the TradFi market as our platform offers fixed-rate interests and guaranteed repayment as money managers say the threat of recession is real and indications are rife that the trajectory of spreads is changing.”
A security audit is being carried out by PeckShield — and the project also says that it’s entered into a partnership with Blockpit so customers will find it easier to self-manage their finances.
The name’s bond, D/Bond
D/Bond argues that traditional bonds are in desperate need of modernization — and everyday consumers have often struggled to access these instruments because they don’t meet the requirements to participate. The project aims to address this by ensuring it’s open to all.
According to D/Bond, ERC-3475 tokens can be used to collateralize fungible and nonfungible tokens — and this standard helps foster interoperability between decentralized bond markets as interest grows. Crucially, they can also be fractionalized, meaning investors will be able to sell off a share of one bond in a secondary marketplace.
“The bond market is an area DeFi has missed, and soon, we’ll see how DeFi manages to disrupt and evolve it,” the project argues.
D/Bond is set to launch in the autumn, and shake up the world of bonds for good. Whereas conventional bonds can only be traded between the hours of 8am and 5pm in the U.S. right now, this platform is aiming to ensure they’re available 24/7 — a truly international market.
This startup is based in Paris, and has gained plenty of momentum over the past year.
Development of the ERC-3475 standard is now complete, and a security audit of D/Bond’s backend is now underway.
The project also says that it’s built a great team and attracted financial backing despite the tough market and global economic environment.
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