How does the Arbor secondary market work?

In case you missed it, Arbor recently launched a new product, an orderbook that allows investors access to a secondary market for Arbor bonds. This market allows investors to take advantage of predictable, high-yield returns on their bonds while having access to liquidity.

How do investors buy and sell bonds using our secondary market?

Our order book follows the classic bid-ask model and uses the limit order framework of 1inch protocol . 1inch is one of the largest DEX aggregators and has battle-tested code.

To use Arbor’s marketplace, please head over to https://app.arbor.finance/ and select “Orderbook” in the top menu bar. You will see the following interface:

On the right side, you can select the active bond you are interested in trading from the dropdown menu. Connect your wallet to begin your orderbook journey!.

Buy bonds

To buy a bond, you have two options:

1. Select the “Buy” filter. This will display all of the open “Sell orders” which are limit orders of investors interested in selling their bonds for USDC. The table lists the amount of bonds the seller has available and the amount of USDC they are requesting for those bonds. You can fill an order partially or in its entirety. Sort the available asks according to the order amount, Yield-to-maturity (YTM), or price.

As a buyer, you want to get the lowest price possible but this is largely dependent on the available volume. Keep in mind that each order needs to be filled separately. High gas fees can make it inefficient to fill in the lowest ask prices instead of just selecting an order with a higher price but sufficient volume.

2. If none of the available sell orders meet your needs, you can create a buy order by selecting the “Orderbook” tab in the top menu bar and select “Buy Order”. Here, you will be able to configure your limit order.

Select the bond you want to buy and enter the amount of bonds, and which currency with which you want to pay. Currently, all of our orders settle in USDC. The “number of tokens” is the total amount of USDC for the entire order of bonds (e.g. buy 100 bonds for 90 USDC). When determining the “number of tokens” (USDC) you will automatically define the bond price and your desired YTM. Finally, set the date you would like the order to expire if it is not filled.

On the right side of the limit order form, our dApp calculates the YTM and price per bond according to your given parameters. This column also provides a summary of your order, so double-check to make sure all the parameters are correct! After clicking “continue”, approve the USDC and complete the transaction to list the order in the marketplace. The USDC must be in your wallet at the time the order is created as, the order cannot be settled. Head back to the orderbook table to see your buy order listed. Orders can be cancelled from the orderbook table.

Sell bonds

To sell bonds, you also have two options.

1. Navigate to the Orderbook table and filter by “Sell”. This lists all of the open orders in which users are interested in purchasing bonds. The table lists the amount of bonds the buyer is interested in purchasing and the amount of USDC they are willing to pay for those bonds. You can fill an order partially or in its entirety.

As a seller, you want the highest price for your bonds possible. However, this also depends on the available volume. Keep in mind each order needs to be filled separately. High gas fees can make it inefficient to fill the highest bid prices instead of just selecting an order with a lower price but sufficient volume.

2. If none of the available sell orders meet your needs, you can create a sell order by selecting the “Orderbook” tab in the top menu bar and select “Sell Order”.

Select the bond you want to sell and enter the amount of bonds and which currency with which you want to be paid. Currently, all limit orders settle in USDC. The “number of tokens” is the total amount of USDC for the entire order of bonds (e.g. sell 100 bonds for 90 USDC). This will automatically define the bond price and YTM. Lastly, set the order expiration date. On the right side of the limit order form, our dApp calculates the YTM and price per bond according to your given parameters. This column provides a summary of your order, so double-check to make sure all the parameters are correct!

After clicking “continue”, approve the bond and complete the transaction to list the order in the marketplace. The bonds must be in your wallet at the time the order is created as otherwise, the order cannot be settled. Head back to the orderbook table to see your sell order listed. Orders can be canceled from the orderbook table.

Happy trading!

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