DBit and DGov Use Cases
Both the D/Bond Index Token (DBit) and the Decentralised Bond Governance Token (DGov) play somewhat interwoven but differing roles in ensuring that the D/Bond is optimised to achieve its intended objective, particularly regarding decentralised bonds (D/Bonds).
The tokens serve interconnected purposes on our innovative platform that seeks to securitise any digital asset and lower the barriers of entry to major traditional finance (TradFi) asset class, bonds.
DBit, DGov, and D/Bonds
D/Bond pioneers the ERC-3475 standard to create D/Bonds as an asset class on the blockchain, tapping into the technology’s decentralised and peer-to-peer (P2P) capabilities to expose as many people to trading, investing, lending, and borrowing bonds without big banks intermediating.
ERC-3475 is gas-efficient, can manage multiple bonds, store more data, and allows any tokens on Solidity-compatible blockchains to create their own bonds. The new liquidity pool (LP) token standard revolutionises the bond creation process from the old from TradFi to the new blockchain-powered decentralised finance (DeFi) system.
The ERC-3475 standard is designed to allow LPs and borrowers to have a customisable agreement over loans/debts, and manage the redemption conditions and price ranges as new financial derivatives are introduced to DeFi.
Apart from serving as a tool for issuing bonds, D/Bonds can be used to create all kinds of financial derivatives such as options, futures, swaps, etc. They can also be implemented for off-chain derivatives by projecting the securitised contract to the blockchain network and using oracle machines to facilitate the transaction of off-chain bonds. These derivatives serve several purposes:
- Being a hedge or mitigating investment risk by entering into an opposite-moving derivative contract to cancel part of the potential loss.
- For creating options with the value of the derivative linked to a predetermined condition or event (e.g., the underlying asset reaching a specific price level).
- To provide leverage such that a slight movement in the underlying value can cause a large difference in the value of the derivative.
- For making a profit from speculating the market movements.
- To allow a riskless profit by simultaneously entering transactions into two or more markets.
D/Capital and the D/Bond Governance Platform
Our ecosystem comprises several parts. Top among them is D/Capital which handles securities like bonds to meet specified investment goals for the benefit of investors; and the D/Bond Governance Platform which uses an on-chain programme called “proposal” as the object of a voting procedure.
D/Capital is based on a decentralised model of a funds management firm and basically replicates everything you know about venture capital, an investment bank, or a nonprofitable organisation.
As a better investment bank—which uses cryptographic blockchain technology to guarantee accessibility and trustworthiness for transparency enforcement unlike in TradFi — D/Capital can borrow money from investors to fund startups, buy stocks, speculate on the financial market, etc.
D/Capital can use the pledged assets of D/Bonds to build up LP for other DeFi projects, invest in their seed phases, etc. It affords D/Bond the opportunity to invest or incubate any on-chain project while its Estonia-registered legal entity, whose bank account will be audited by an accounting firm, will cover off-chain investments.
At the same time, D/Bond users and community stand to participate in the entire process as all the investment decisions of D/Capital, whether on-chain or off-chain, need to be approved by voting on the Governance Platform.
The Governance Platform proposal is usually in the form of an open-source smart contract that imposes an underlying obligation on the governance system to execute the content of a code like spending funds, issuing allocations, updating a smart contract, etc.
The combined functionalities of D/Capital and the Governance Platform bring out some of the interwoven use cases of the two digital assets on the D/Bond platform.
- To vote for a proposal, you need votes. To get votes, you have to buy and stake DGov in a dedicated contract to be eligible. All users who voted for a proposal get DBit rewards in proportion to the number of their votes and the time they vote.
- D/Capital also offers a bonus share when voting for a proposal. Only DGov holders, who indirectly hold the share of the on-chain and off-chain projects that D/Capital invested in, get the bonus reward.
- Users have to first buy or stake DBit or DGov to issue bonds which they can later redeem at a maturity date in a settlement currency. The buying method entails minting new DBit according to the value of the pledged asset while the staking method transfers the corresponding amount of DBit from the LP to the investor.
All in all, DBit serves as the settlement currency of the D/Bond ecosystem. It is the protocol’s native main asset that represents and measures the investment performance and characteristics of the D/Bond market on the basis of utility and outlined business model. DGov represents a shareholding proof of an investor’s investment in D/Bond’s main decentralised governance platform, D/Capital.