Collateral Types

Defines the different types of collateral acquired by issued bonds.

There are four different types of collateral deposited by users into the bond contracts:

  • Yield Bearing

  • Stablecoins

  • Store of Value

  • Liquidity Tokens

Yield bearing asset are any sort of collateral that is capable of generating yield without experiencing the risks of impermanence loss. Examples of yield generating assets are tokens such as ATOM and SCRT which are all capable of being staked to generate yield.

Stablecoins are digital assets that hold a target price and are able to be redeemed or sold at the target peg regardless of market conditions. The quality of a stablecoin is based on six variables:

  • Liquidity

  • Bridge risk

  • Smart contract risk

  • Degree of decentralization

  • Volatility

  • Stability mechanisms

The higher the quality of stablecoin, the more likely the ShadeDAO will issue a bond to acquired said stablecoin. These stablecoins can be used to back Silk issuance, or to deepen liquidity on Shade Apps (such as ShadeSwap).

Scarce stores of value are non-yield bearing assets that are volatile, but with economic levers focused on value accrual due to a combination of long term scarcity and utility. Examples of this are Bitcoin, Ethereum, and Monero - all of which have deep liquidity, scarcity mechanisms (such as halvenings), and have historical relevance.

Liquidity tokens are service providing and yield-bearing assets that incur the risk of potential impermanence loss. Liquidity tokens are mathematical claims on a portion of tokens tied to liquidity pools on decentralized exchanges such as ShadeSwap. The more liquidity tokens owned by the ShadeDAO, the better the user experience and service provided by ShadeSwap.

Target List

The following is a list of prioritized assets targeted by bonds:

  • sSCRT

  • stkd-SCRT

  • sATOM

  • XMR

  • wBTC

  • wETH

  • DAI

  • CMST

  • IST


Initially, the ShadeDAO will be heavily focused on acquiring yield bearing assets and liquidity tokens during the beginning of the protocol’s lifecycle. Overtime, there should be a steady shift towards holding more and more stablecoins and scarce stores of value as adoption of Silk and Shade Protocol primitives solidifies.

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