(MENAFN– Zex PR Wire)
Singapore, 18 Feb 2022, ZEXPRWIRE , 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.
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.
Why Position Bonds?
Instant Cash…
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