Liquidity Bonds — Simplified
Optim’s Liquidity Bond platform enables the lending and borrowing of staking rights between users at mutually beneficial rates as determined by buyers and sellers in the market.
It is important to note that all bonds, at their core, are the same.
Every Bond Token has a face value of 100 ADA. Meaning every Bond Token can be redeemed for 100 ADA + accrued interest within a predefined time window in the future. The 100 ADA of each bond token represents the 100 ADA of staking rights that have been lent to a borrower.
The different ‘types’ of bonds — SPO, IBO, ISO, etc. — all simply refer to different borrowers (use cases) and the likely duration, interest type, and interest rate a lender will see from these borrowers.
SPO Bonds — targeting small SPO borrowers willing to pay a premium to start minting blocks consistently, market proven operational competence and higher pool ROA to attract organic delegation.
IBO Bonds — these aim to replace ISPOs by targeting projects that will borrow staking rights and pay interest in native tokens. Projects can delegate to existing pools and raise funds instead of running and saturating their own stake pools. This helps maintain decentralization and the health of the existing, organic SPO ecosystem.
ISO Bonds — gives borrowers of staking rights leverage to enter into an ISPO with more ADA than they have custody of. These also become a more general form of a transaction that allows loans of any size and payments.
Issue Bond (Borrow)
When a user wants to borrow ADA staking rights, they ‘Issue’ bonds. Meaning they offer interest and terms that lenders can accept if they wish to lend the staking rights to ADA. Lenders can ‘buy’ bonds, each with a 100 ADA face value, representing lent ADA. An Ownership NFT represents the borrow position, gives the owner the right to attach any stake key, and is transferable.
Buy Bond (Lend)
If a lender sees an appealing offer, they ‘Buy’ a bond(s) from the issuer. Meaning they lock their ADA into a smart contract that enforces the terms offered by the borrower who issued the bond. When a lender buys a bond, their ADA is locked into a UTXO which the borrower can attach any stake key to for the duration of the bond as long as the terms are met.
Principal & Interest
Every Bond in the Optim system has a face value of 100 ADA represented by a transferable Bond Token. The Bond Token functions as a claim on the underlying ADA plus the interest that is contained within a UTXO. The underlying ADA and interest can be redeemed at a maximum predetermined duration. If the interest terms of a bond, in the form of ongoing payment, are not met the bond can be closed. All ADA plus accrued interest is redeemed before the end of the bond’s max duration.