How to Ensure the Repayment of Bonds with Amet Finance

Amet Finance
3 min readNov 15, 2023
How to Ensure the Repayment of Bonds with Amet Finance

At Amet Finance, our mission is to make decentralized finance more accessible and secure. We’ve developed the ZeroCouponBondsV1_AmetFinance contract, our first step in revolutionizing how bonds work in the DeFI world. This contract is designed to be user-friendly and safe, ensuring that you get the most out of your bonds.

Understanding How It Works

To start, let’s keep in mind that doing your research is crucial when you’re investing in the world of blockchain and DeFI. It’s a must to ensure that you make informed choices, and we encourage all users to take the time to understand the basics.

Building Trust in a Decentralized World

Our contract is built with decentralization in mind. The primary way we ensure repayment is by securing the funds inside the contract. Funds can’t be withdrawn unless they’re more than enough to pay off all the unredeemed bonds. You can check the “Secured Percentage” for each bond on our website — it tells you what proportion of the total amount is safely held in the contract.

Screenshot from Amet Finance

Knowing the Issuer

It’s a good practice to invest in bonds where you know and trust the issuer. In Amet Finance’s early stages, we rely on Proof of Authority (POA) to establish trust.

Upcoming Features: Extra Security for Your Bonds

We’re actively working on a Reputation Scoring system for bond issuers. A higher reputation score means more purchasers and stricter measures for defaults.

Screenshot from Amet Finance

Additional Techniques for Repayment Assurance

  • Collateral and Liquidation: Issuers may have to provide collateral exceeding the total bond amount. This collateral can be sold to repay bondholders if the issuer defaults.
  • Smart Contract Escrow: Using a smart contract escrow service to hold funds raised during bond issuance. The funds are only released to the issuer if they meet their obligations. If not, these funds can be used to repay bondholders.
  • Trust-Minimization: Our trust-minimization approach links bond success to the issuer’s project milestones or metrics. If the project hits certain goals, bondholders get interest automatically. Otherwise, the funds are returned to bondholders.
  • NFT as Proof of Ownership: We’re excited to introduce NFTs as proof of bond ownership, allowing bondholders to participate in the voting process.
  • Insurance Pools or Guarantor System: We’re exploring the use of insurance pools, where issuers pay premiums to protect against bond defaults. In case of default, the pool covers interest payments. A similar guarantor system is in the works, where guarantors receive fees from each purchase.

Amet Finance is committed to creating a DeFI ecosystem where bonds are secure and user-friendly. We’re here to ensure your journey in DeFI is safe and hassle-free.

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Amet Finance

Amet Finance is a DeFi platform specializing in on-chain bonds, allowing users to issue, manage, and trade bonds in a secure and efficient environment.