Let’s Earn some Yield by Putting XOR on a Balance Sheet
Exploring the opportunity to put XOR on the balance sheet and earn yield; referendum coming this week.
TL;DR
- 500 million XOR are proposed to be created to earn yield on a financial institution's balance sheet.
- Opportunities like this showcase the advantages of having elasticity and flexibility in monetary policy.
XOR・天・𒀭
XOR is the sexiest crypto. It allows for sustainably high economic growth by providing an active monetary policy controlled by all XOR token holders. Using XOR, economies can finance producers without giving up their vision or control to monied interests.
However, that doesn’t mean we cannot benefit from collaborating with monied interests on terms that benefit our ecosystem. Due to our flexible monetary policy driven by on-chain governance, SORA has many opportunities that don’t exist for other blockchain projects.
拋磚引𒀭・Toss Out A Brick To Attract XOR
One such exciting opportunity has been presented to us: we can earn yield from a financial institution by letting them borrow 500 million XOR for ten years. This is achieved through a process known as a repo agreement, where an institution can borrow XOR and give us a yield-bearing instrument (such as preferred shares) in exchange. After ten years, the agreement can be extended, or the assets mutually returned.
There are also provisions for selling a few percent of the XOR via OTC to prove asset pricing to auditors, but these XORs are to be traded privately and not on the general market. This strategy allows the institution we work with to manage and balance its financial obligations effectively while we can also gain passive benefits with little risk. If successful, this is an easily repeatable formula.
Recall that balance sheets are designed to balance assets and liabilities; this is a fundamental principle of accounting and finance. In an archetypal balance sheet, you would typically find assets listed on the left-hand side, while the liabilities are stated on the right.
Regarding financial principles, solvency is the situation where a company or institution has at least as many assets as liabilities. This means the firm has sufficient resources to cover its debts and obligations. On the other hand, liquidity measures an institution’s ability to pay off its short-term liabilities as and when they fall due.
As depicted in the following example, XOR can be put on a balance sheet along with other assets that may be held. They can be assigned a fiat value to financially account for balancing out the liabilities that the financial institution may issue.
You can take this free course to learn more about repo agreements and balance sheets (and banking in general).
Let’s Decide
This week, an on-chain referendum will decide whether or not to mint TBCD to buy 500 million XOR and earn a yield on a balance sheet. If the referendum passes, the TBCD will be converted to XOR, and we should start earning yield within a few months.
About SORA
SORA is an innovative, adaptive, non-debt-based monetary framework that facilitates economic stability, particularly for financially vulnerable countries. As a groundbreaking platform, SORA exemplifies the potential of blockchain technology in fostering a more inclusive and stable global financial system. Its integration in projects like the Bokolo Cash CBDC signifies a new era in digital currency, aligning technological advancements to achieve broader economic stability and resilience. Through its unique approach and capabilities, SORA plays a pivotal role in the evolution of global finance, particularly by supporting economies that need innovative and sustainable financial solutions the most.
