What Is DeFi Bonding / Bonds

Bonding is starting to become a hot topic around here because of PolyCub DeFi and defi projects in general. In this article I'm going to go over what DeFi(Decentralized Finance) bonding is and how it operates and could operate ad DeFi continues to advance.

Bonds are a means of investment that has been around for a long time. In general a bond is a security which an issuer owes the holder a debt and repays the principal of the bond a the date of maturity along with a specified amount of interest. In most cases this interest rate is a fixed one and not variable.

Bonds on DeFi

At the moment there is limited reach in terms of bonds in the DeFi marketplace. This is mainly because there is a lack of standards and infrastructure to support bonding. Since DeFi is young and ever changing new methods and ways of finances are constantly being learned and adapted. With defi bonds it allows a investor to take part in the success of the platform while mitigating risks.

Think of DeFi bonds as a digital IOU that are traded in the blockchain as open sources and needs no middle man (often a fee sucking soul crushing event for anyone to take part in) this also allows for more money to be given between people instead of a middleman.

How Do DeFi Bonds Work?

It allows investors to put money into a project for example PolyCub and get a return on investment when it's completed. Since it's on the blockchain it provides open transparency and security. For example someone could use their Bitcoin or another crypto and place it into the bond while getting steady monthly payments over time.

One of the most important factors that plays into this is the ability now for people to get bonds and make investments in things such as real estate and other venture capitals. It provides a sense of security that starts to greatly mitigate the chances of fraud and being scammed which are often issues on DeFi platforms in the past although it's been greatly mitigated as of late.

Some information about how Polycub will be implementing features such as this can be found in this post.

Collateralized Lending on Web3 DeFi

DeFi Bonds vs Bonds

Bonds are pretty much reserved to governments and large corporations only. This limits the possibilities of these bonds and limits the amount of people that can be involved with them.

However with DeFi crypto bonds they are decentralized bonds which means anyone can take part as they are generated from digital assets anyone can own. This creates a smart contract most likely on a ERC-3475 smart contract token that is a representation of the bond.

This is a pretty new aspect to DeFi and like it will continue to advance and change as it goes live. What are you thoughts on DeFi bonds and bonding?

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