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Bonds
Safe Deposits, Safe Yield.
Shade Bonds are a privacy-preserving DeFi instrument where users can purchase digital assets from the ShadeDAO by depositing protocol desired cryptocurrencies into a smart contract. The rate at which users deposits assets into the bond smart contract is at a fixed spot price determined by Shade Protocol governance. The rate issued is typically at a discount compared to the market. This discount is given to incentivize users to deposit and acquire assets at a discount.
Bonds Whitepaper.pdf
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Shade Bonds empower the ShadeDAO to acquire uncorrelated assets that are capable of generating yield and deepening liquidity for Shade Apps such as ShadeSwap or ShadeLend.

Profit Scenario

Assume that SHD is trading at $10
(1) User deposits $900 worth of ATOM into the bond contract
  • A 10% bond discount locks in 100 SHD for claim (worth $1,000)
(2) User waits 14 a day vesting period
(3) User claims 100 SHD worth $1,000
From here, a user can sell their claimed SHD for $100 of profit or they could choose to use this newly acquired SHD for staking or lending.

Loss Scenario

Assume that SHD is trading at $10
(1) User deposits $900 worth of ATOM into the bond contract
  • A 10% bond discount locks in 100 SHD for claim (worth $1,000)
(2) User waits 14 day vesting period
(3) Price of SHD decreased to $8
(3) User claims 100 SHD worth $800
From here, a user can sell their claimed SHD for a $100 loss.

Summary

Bonds are a powerful DeFi primitive that will help bootstrap, scale, and grow the ShadeDAO. Governance carefully manages the issuance of Shade bonds so as to not introduce damaging liquidity shocks into the market. If balanced properly, bonds can be the Shade Protocol's primary tool for gathering protocol owned liquidity, yield, and stability for Silk and other key Shade Protocol primitives.
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Profit Scenario
Loss Scenario
Summary