May 19
D/Bond Keeps Focusing on the Promise of Financial Freedom
At D/Bond, our market maker decentralised finance (DeFi) platform is not moved even in the face of the UST/LUNA (Terra) debacle. We continue with our resolve to maintain a focus on our groundbreaking project to contribute to testing and verifying services to show that it is built on sound foundations.
It is forging ahead to fulfill DeFi’s promise of financial freedom globally by being a bridge between TradFi and DeFi as it opens up a new and calculable way for users with a lower risk appetite to invest in DeFi.
The objective will be achieved by making the creation of a new asset class on the blockchain for individuals and institutions possible. Using the ERC/3475 standard, D/Bond will issue decentralised bonds and derivatives that will be tradeable on the secondary market.
Despite situations like the UST/LUNA issue, where one of the largest stablecoins dropped over 70% from the USD parity on 11 May, the D/Bond project is aware of DeFi’s high volatility, frequent frauds, scams, and cumbersome decentralized applications (dApps), as well as the high barriers of entry to one of the most reliable TradFi asset class: bonds.
The UST/LUNA Debacle
The UST comes with unique features. It is an algorithmic stablecoin that passes on the price risk to another token, in this case, LUNA (Terra). Somewhat not commonly-used, algorithmic stablecoins differ in their collateralization as model-dependent price determination. They operate based on two tokens — one stablecoin and another cryptocurrency backing the stablecoin — while the algorithm manages the relationship between them.
They do not have independent assets in reserves to back the value of their stablecoins and their ability to ensure parity is highly dependent on the assumptions underlying the model.
Several questions are bound to arise in the wake of the UST meltdown. There is one about what to expect as a result of the UST collapse. Well, it is obvious that regulators would have a field day scouring through the crypto markets in the next few weeks. While some of them have reacted strongly so far, the general view is to expect more regulatory actions on stablecoins — and to a larger extent on the entire crypto market — over time.
The debacle has so far caused ripple effects in the crypto market and triggered reactions by regulators from various quarters including the U.K. government and the European Union Commission which plans to issue an order soon.
Unregulated stablecoins should expect the worst in terms of exerted pressure. They may have to be forced to get backed 100% by fiat deposits, or by low-risk assets and be fully regulated so as to be recognized as a financial instrument that meets the needs of the new regulatory framework.
The other question emanating from the UST collapse, combined with the prolonged bearish state of the entire crypto market, is how DeFi, with all of its imperfections, is likely to support the building, growth, and sustainability of the much-talked about Web 3.0 and the Metaverse.
This is talking about hacks, the loss incurred in the total value locked in DeFi which slumped by about 56% from its peak and DeFi tokens being down 71% for the year to exceed the underlying Ethereum token decline of 43%. Yet, Web 3.0 and the Metaverse are expected to thrive on DeFi.
Well, the fact remains that the foundation of Web 3.0 and the Metaverse is still in DeFi. Web 3.0 is dependent on the power of blockchain technology. As a decentralised form of the internet, Web 3.0 can only thrive in achieving its notion of freedom for all and curb the excesses of centralised platforms like Facebook and Google which have dominated the internet.
DeFi promotes creativity as evident with the growing NFT industry where digital right ownership is now possible for the first time. DeFi offers the infrastructure needed for the financial transactions that support the growth of NFTs, and at the same time widen the environment as the metaverse thrives.
Our Unwaivering Focus
We at D/Bond, still subscribe to the notion that a decentralised system is — and will forever be — superior to a centralised one despite all possible flaws. We understand DeFi is still “not there” yet, but we believe that with solutions like ours, the market will mature to that point sooner than many would expect.
Even with the clear demand even by big entities like the European Investment Bank, Société Général, and automotive giant, Mercedes-Benz Group to issue bonds on the blockchain, it is only large corporations and governments who can continue to issue them — while investors usually pay high fees for their investments.
It is D/Bond’s mission to make this coveted, reliable asset class available for almost everyone including the unbanked across the globe. D/Bond’s ERC/3475 upgrades the ERC–20 token standard to store additional metadata for issuing bonds such as the interest rate, maturity date, etc. We believe that it will unleash unparalleled financial potential across the world. This is exactly the core of what we do: bringing more financial freedom for all.
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