A Dummies Guide to SuperBonds
We won’t bore you with a lengthy tale of how Superbonds is the best thing since sliced bread. Read our guide and decide for yourself if it is. We’ll cover:
- What SuperBonds is
- What problem SuperBonds solves
- How SuperBonds works
- How SuperBonds puts $ in your pocket
- Who is behind SuperBonds
- The SB token
- Our roadmap
This is the Dummies’ Guide to SuperBonds:
What is SuperBonds?
SuperBonds is the first bond market on Solana. In fact, it is the first bond market in all of DeFi, as no comparable product exists. SuperBonds is the first decentralized opportunity to earn fixed yield in DeFi. In traditional finance, fixed yield products stand for predictable and risk-free returns. SuperBonds is the first DeFi product providing these same predictable and risk-free returns.
With the bond market created by SuperBonds, we will be able — for the first time ever — to define the cost of capital in the crypto ecosystem. Put differently: once SuperBonds is up and running, we will know the risk-free rate of return in DeFi. This creates a vital piece of financial infrastructure still missing to date.
What Problem Does SuperBonds Solve?
We identified a problem that is glaringly obvious to us but that the crypto market seems totally oblivious to:
The market confuses yield and interest rates and is therefore inefficient.
Let us explain.
If you invest your hard-earned fiat or crypto moolah into something like Anchor Protocol, you earn a yield of 19.5% on your principal. 19.5% is the protocol’s interest rate. However, it is not risk-free. In fact, there is a ton of risk involved, like a de-peg of UST and smart contract risks. Never mind the fact that Do Kwon and the Terra Foundation set the interest rate as they please.
If you deploy your capital to something like Curve Pool 3, the market determines the interest rate (i.e., in a decentralized manner). But your yield is not fixed. Quite the opposite, your CRV rewards are variable and fluctuate in value. Furthermore, once you provide liquidity, your capital is static and cannot be used elsewhere as collateral.
This leads us to the heart of the matter: the current market solutions are inefficient due to overcollateralization.
If only there was something like a bond market, where capital could be deployed to earn a fixed, predictable yield. In this bond market, you could buy a bond and then use your bond as collateral, knowing that, in any case, your return is predictable. Say you made good use of technology — like making your bond an NFT — you could even build more complex infrastructure on top of it.
SuperBonds makes all of this possible and establishes the first decentralized DeFi bond market.
How Does SuperBonds Work?
There are two market participants in SuperBonds: traders and liquidity providers.
Let’s take Joe and Donald as an example.
Joe is a trader. has 100,000 USDT from his recent speaker gig. He is a risk-averse fella, so Joe is looking to earn a nice and stable return on his money.
Donald, on the other hand, is a liquidity provider. He has a lot of capital but likes to take a bit more risk. He is looking for an opportunity to provide liquidity for a higher rate of return.
Joe buys a SuperBond — a 30-day or a 90-day bond — on the MetaYielder platform. He will earn a fixed yield: 10% on the 30-day bond and 15% on the 90-day bond. Joe does not provide the capital for his bond — he merely buys the NFT representing his claim. The beauty about this: If Joe changes his mind halfway through, he can redeem the NFT for its current value. Thus, Joe can trade his bond as he wishes.
But where does Joe’s return come from?
This is where Donald comes in. Donald provides the liquidity to underwrite Joe’s claim. By providing liquidity, Donald receives LP tokens, a share of the trading fees, and SB tokens as a reward. Donald can then stake his LP tokens and SB tokens for additional farming rewards.
But where does the return for Donald’s liquidity come from?
This is where the SuperBonds platform comes in. It deploys the provided liquidity via Wormhole to farm cross-chain rewards and generates the necessary return for bondholders and liquidity providers. Since the entire process is permissionless and decentralized, SuperBonds establishes the true cost of capital in DeFi through incentive design and market forces.
You can find a detailed explanation of the platform dynamics in our deep dive into bond underwriting on SuperBonds.
Why You as DeFi Investor Should Care
As a risk-averse DeFi investor, you face two problems: custody of funds and predictability of returns.
If you’re like Joe and want a nice and stable return on your money, you can turn to centralized platforms like Neko or Celsius. However, you will have to give up custody of your funds. This is mostly a matter of taste. Many of these platforms have proven to be fairly secure, but you never know when the regulatory hammer could come down on them. And some people understandably dislike the thought of having to rely on others to return their funds.
Even worse, your returns are unpredictable. Centralized staking platforms can change the rate at a whim and don’t even offer the flexibility of a decentralized platform. Moreover, your return is far from being risk-free but rather at the mercy of a centralized platform.
This means you are back to square one: your capital is not being used in the most efficient manner.
SuperBonds solves both of these problems.
The MetaYielder platform offers custody (bonds are NFTs), fixed yield, and flexibility (you can trade your bond NFT any time). Your capital is deployed efficiently, and you hold on to it at all times. As SuperBonds integrates with the wider DeFi market, you will also be able to re-deploy it as collateral.
Put differently, SuperBonds is the solution to the lack of a DeFi bond market.
Who is Behind SuperBonds?
We are a team of former TradFi professionals seeking to professionalize the crypto markets and raise their efficiency.
Booo, how boring, TradFi. Yes, yes, we know.
Yes, we’re not your group of 19yo meme stock traders that went from McDonald’s to Lambo. But in this case, that’s a good thing. If decentralized finance is to become more useable and develop utility beyond “muh yield,” someone needs to build essential infrastructure to do that.
That is why we created SuperBonds.
What Does The SB Token Do
As things stand, the SB token has one use case only: it is used as gas for any transaction on the SuperBonds platform.
Every transaction burns a fixed amount of SB. That includes bond trading and liquidity provision. With a fixed total supply of 10 billion SB, this guarantees a deflationary dynamic for the token. SuperBonds incentivizes platform usage with a generous rewards program: 6 billion SB tokens are allocated towards protocol rewards. These will be available through staking LP tokens (liquidity providers) and active trading (bond traders).
After the SuperBonds platform has been launched and battle-tested, additional token use cases are planned. This includes governance features and treasury claims for token holders. These will become available throughout 2022.
You can find additional information about SB tokenomics in our SB tokenomics article.
The SuperBonds Roadmap
The backend of SuperBonds was built in 2021. In Q4 2021, we closed our pre-seed raise and launched the private and later the public devnet of SuperBonds. The SB token went live on November 30, 2021.
The 2022 roadmap looks as follows:
- Mainnet launch of the MetaYielder platform in April 2022.
- Launch of the MetaLend platform in summer/fall 2022, followed by the automation of MetaLend issuance.
- Enabling of governance and transfer of SuperBonds to a DAO in winter 2022.
These will mark milestones for the SuperBonds platform. However, we will provide dedicated updates about minor platform updates taking place regularly.
If you are now convinced that SuperBonds is the best thing since sliced bread (at least in DeFi), we congratulate you because it is! For more information, head over to our white paper.