Position Bonds are crypto bonds powered by smart contracts
Position Bonds are here to enrich the range of product choices in DeFi, introducing a type of crypto bond to investors. Although still in its infancy, the homogenization of competition in the DeFi area is already evident. Crypto bonds, with their blockchain-native nature, will potentially revolutionize the traditional bond market in terms of cryptographic-security, transparency and automation.
According to the 2021 Dapp Industry Report, the total value locked (TVL) in decentralized finance (DeFi) reached $189 billion as of the time of the report. DeFi has the potential to further digitize, democratize and shake up the order of global traditional finance (TradFi).
Unlike traditional financial instruments, such as stocks and funds, DeFi is still in the early stages of development and years behind mass adoption and acceptance. Nonetheless, innovations continue to emerge in the world of DeFi, gradually enabling people to use financial services in a fully open, borderless, and transparent way. Among them we find Position Exchange, with its crypto bonds to diversify the portfolio of DeFi investors.
Traditional bonds VS crypto bonds
A bond is a fixed-income instrument that represents a loan made by an investor to a borrower. In other words, a bond is an instrument for issuers to finance their projects and operations. The issuers of bonds vary from companies, municipalities, states, to sovereign governments, or even celebrities. For example, a Bowie Bond was a unique type of asset-backed security which used as collateral the royalty streams from current (at the time) and future album sales and live performances by musician David Bowie.
Investors welcome bonds because these provide a predictable income stream so it can add an element of stability to the investment portfolio. Although it is considered to be safer and more conservative to invest in bonds, there is still a possibility for default risk. Credit rating relies on third party agencies like Standard and Poor’s, Moody’s, and Fitch Ratings.
Crypto bonds, with their blockchain-native nature, will potentially revolutionize the traditional bond market in terms of cryptographic-security, transparency and automation.
How does it work?
Leveraging on smart contracts, given the complexities of bond issuance and rating, the efficiency, transparency and automation of the process can still be improved. In addition, by eliminating intermediaries, crypto bond issuers will be able to enjoy a lower cost. More subversively, crypto bonds use DeFi assets and derivatives to design bonds, which is an unprecedented attempt to innovate and revolutionize the diversity of digital assets.
What are Position Bonds?
Although still in its infancy, the homogenization of competition in the DeFi area is already evident. The current DeFi landscape is dominated by products and projects providing Automated Pools where lenders and borrowers interact. However, with the competition getting fiercer, the return on investment lowers.
Specializing in derivative products as a crypto platform, Position Exchange is aiming to enrich the DeFi product choices of the investors. In this way, diversity of the investment portfolio will be improved, so will the investors’ ability to resist risk. Position Exchange is introducing its first derivative product, the fully on-chain and stackable bonds.
In a similar fashion to bond trading, users can purchase and exchange crypto bonds using Position Exchange. Deeply integrated with DeFi, for the next step, users can stake the bond in the Bond Pool with a stable and fixed APR for a determined duration. Once the bonds reach maturity, the issuer will pay back the principle plus interest. To lower the risk of default, various assets back these crypto as collateral and the platform will use smart contracts to lock these assets away. As a result, a bond redemption can be guaranteed.
Exchanging bonds on the Position Bond Exchange is also feasible. And users can even issue their own. Individuals, companies, and projects can issue Position Bonds to fund their business and projects by simply locking their assets (tokens, coins, digital art or even virtual real estate) as collateral.
Position Bonds development stages
Users will be able to experience the fully on-chain crypto bonds with Position Bonds. Whether users want to issue, purchase or earn high yield through crypto bonds, Position Bonds will equip them with the one-stop platform they need.
The bond features will come to fruition through three main phases:
- Position Bonds implementation and development for smart contracts. After completion of this phase, users will be able to purchase and stake Position Bonds to earn high and stable returns.
- The Position Bond Exchange, where users can buy and sell crypto bonds easily and fully on-chain on the exchange.
- The Bonds Launchpad. This feature allows individuals, projects and companies to issue their own bonds easily on Position Exchange by submitting an application and providing a collateral.
Position Exchange in short
Position Exchange is a decentralized crypto platform with an entire ecosystem that is fully governed by its own community. That platform enables users to stake, farm, trade, swap, cast NFTs, earn and invest in an open, transparent and trustless system that runs fully on-chain.
By enhancing trading experiences, it bridges the gap between experienced traders and newcomers in crypto. Its native token, POSI, is a BEP20 token on BSC that powers its ecosystem.
POSI is a utility token and a trading incentive. Furthermore, the token encourages decentralized governance of the protocol as POSI tokens accrue voting rights proportional to holdings.
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