Bonds haven't played a big role in DeFi yet — but that's about to change
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.
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
Read more on cointelegraph.com
