Introducing the RAFT Bond Program Powered by Bond Protocol

In the ever-evolving world of crypto and DeFi, innovative solutions continually emerge to address the challenges faced by projects in the space. Today, we are thrilled to launch our inaugural bonding program, powered by Bond Protocol’s battle tested permissionless infrastructure.

Here's what you need to know.

What is Bond Protocol?

Bond Protocol made its debut on 3 October, 2022, with a mission to drive sustainable treasury growth for crypto projects. Their suite, which has quickly gained traction in the space, currently includes two major products:

  1. Permissionless Bonds - Operational on Ethereum, Arbitrum, and Optimism.

  2. Options Liquidity Mining - Available on Ethereum and Arbitrum.

    To date, Bond Protocol has overseen more than $60 million in bond purchases and has built a reputation for reliability, having undergone audits by Sherlock, Zellic, and yAcademy.

How do bonds work?

Bonds operate on a straightforward principle. They enable protocols to issue vested tokens to secure strategic assets. Here's a simplified breakdown:

  • Bond Investors deposit an asset, called the quote asset.

  • In return, they receive another asset, known as the payout asset, at a discount relative to its market price.

  • The payout asset isn’t handed over instantly. Instead, it's vested over a predetermined number of days.

    In Raft's case, the bonds will be issued with R as the quote asset and RAFT as the payout asset. The bonds will be vested for 5 days and will have a maximum capacity of 2,000,000 RAFT.

    If you want to familiarize yourself with the steps required to purchase a bond, you can check the official Bond Protocol documentation here.

Advantages of Using Bonds

Raft’s decision to adopt bonds is multifaceted. Bonds offer:

  1. Treasury Diversification: Enabling projects to manage and diversify their treasury assets.

  2. Liquidity Ownership: Providing a tool for managing liquidity and controlling its distribution.

  3. Emissions Management: Facilitating the management of token emissions and distribution.

  4. Strategic Asset Acquisition: Efficiently acquiring strategic assets for the project.

    Investors also stand to gain too as they have an enticing opportunity to obtain RAFT at a price lower than the prevailing market rate.

The Pricing Mechanism for Bonds

To ensure fairness and prevent any undue market influences, Raft has chosen the Sequential Dutch Auction (SDA) method for bonds pricing. Here's what this means:

  • The discount on RAFT’s market price will escalate progressively until a bond purchase happens. After a purchase, the discount will decrease proportionately based on how large the purchased amount is compared to the bond maximum capacity.

  • The discount could also turn negative (the payout asset is sold at a price higher than the market price) but it keeps increasing over time until the next bond purchase.

  • Both the daily discount and the number of RAFT tokens accessible for a single transaction have caps. This approach is to deter substantial RAFT token sales at significant discounts.

    If you want to familiarize yourself with how the Sequential Dutch Auction mechanism works, you can check the official Bond Protocol’s Medium post here.

In essence, Raft's introduction of bonds, powered by Bond Protocol, marks a significant step forward in our journey. It not only reaffirms Raft's commitment to innovation but also presents a mutually beneficial opportunity for both the project and its investors.

Get started with the RAFT Bond Program:

If you want to dig deeper into the bond’s mechanics, you can find the official Bond Protocol documentation here.

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