CryptoBonds: The Inauguration of New NFT Asset Class In DeFi Ecosystem
SYNC Network, an Ethereum-based network that is presently in development, offered a new asset class called CryptoBonds to the DeFi sector.
CryptoBonds, which are backed by an ERC-721 contract, are essentially time-locked non-fungible tokens (NFTs) that produce incentives for their holders.
Liquidity mining is currently the most frequently utilised and profitable incentive technique in the DeFi ecosystem. Hence, NFTs are used to offer liquidity to decentralised exchange (DEX) protocols.
Many projects rely on it to offer liquidity to users and keep their platform running, while investors utilise it to earn profits on digital assets held in trust.
https://twitter.com/opensea/status/1445121510537109517
This incentive structure has played a major part in the growth of DeFi, but it is also responsible for the market instability ever since, due to many reasons such as the freedom for investors to withdraw at any time, and price volatility.
However, the launch of CryptoBonds will change the situation. This brand new asset class may effectively maintain liquidity in DEX protocols, in addition to ensuring that long-term investors are properly rewarded for their efforts.
How do CryptoBonds Work?
A CryptoBond is composed of three main components: liquidity provider tokens (LPTs), SYNC tokens, and NFT highlight artwork. The NFT highlight is what gives CryptoBonds their uniqueness and tradability.
In addition, the artwork is created in a unique manner for each new CryptoBond that is issued by an algorithm.
To create a CryptoBond, a user must first get in touch with an Ethereum network DEX protocol, such as Uniswap, and stake a trading pair in order to get LPTs in return.
https://twitter.com/uniswapgrants/status/1443609356226924549
These LPTs are then combined with an equal amount of SYNC tokens and connected to an NFT highlight and CryptoBond ID in order to establish a CryptoBond utilising the SYNC platform.
Each CryptoBond has a lock term that may range from 90 days to three years, depending on the bond. During this time, investors will be unable to access their crypto coins holdings. However, since the bond is a rare NFT, it may be traded as a whole on NFT exchanges if the investor wishes to exit their investment before the bond’s expiration date.
What Benefits Will Users Get From CryptoBonds?
CryptoBonds provide interest income from the supply of liquidity on the DEX. When the NFT matures, it is burned, and investors get all of the revenue as well as locked SYNC tokens and newly mined SYNC tokens. The return is significantly higher than conventional liquidity mining.
Moreover, the introduction of CryptoBonds may finally put an end to the debate over whether or not NFTs are really beneficial in terms of real use cases.
NFTs are increasingly being used in the DeFi ecosystem not just to create liquidity, but also to maintain stability and risk reduction. They are also valuable because of their scarcity, which makes them one-of-a-kind collectables that can be traded for profit on NFT marketplaces across the globe.
The SYNC Network also has a peer-to-peer lending feature that takes CryptoBonds as collateral. It is the borrower’s and lender’s responsibility to reach an agreement on the loan’s duration and interest rate.
https://twitter.com/newsbtc/status/1445741135591206913
The SYNC network is actively changing the way the DeFi ecosystem operates by bringing together NFTs and DeFi, while also strengthening the role of NFTs in the financial markets, and we think this revolutionary platform has the ability to revolutionise NFTs and to shift public perceptions of them across the world.
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