BOND INSTALLMENT- A GROUND-BREAKING STRATEGY FOR WISE INVESTORS
What is an installment bond?
Bond installment allows bonders to buy more TOD with a certain amount of assets and pay the debt later. This type of bond offers users with small amounts of capital to obtain more bonds and then earn more profit from auto-compounding staking.
Bond installment and Traditional Bond — which one brings more benefits?
With the same amount of initial assets used to buy bonds, users who acquire installment bonds will receive excellent benefits in the long term than those who purchase bonds with payout 100% value.
For example, with the price of bond TOD at 12$, Alice spends 120$ to buy 10TOD while Billy also spends 120$ on buying 15TOD with a six-month installment plan. Billy carries a loan of 60$ for 5TOD with a 10% monthly interest rate.
Assume that the price of TOD does not change significantly, Allice & Billy receive benefits with APY = 7233%, after six months:
- Alice will own 83,15X (~998$)
- Billy will own 124,72X (~1497$) and be in debt for 106$ including 60$ initial loan and 46$ interest debt.
Thus, with the same amount of capital, those who use installment bonds gain a bigger benefit than those who buy traditional bonds, and the gap between the profit of A and B widens over time. The longer you stake with bond installment strategy, the bigger profit you gain. You can do your calculations based on this link.
Users can decide when they want to pay off their debt, and their bonds will be claimed once they have done so. In case they can not pay out all their debt on time, other users can liquidate their bonds.
(5,5) Theory
The (3, 3) Game Theory was first introduced by OlympusDao as the most optimal way to earn profit for users participating in their tokenomic.
With TraDAO, we decided to level up the game to bring more excitement into our tokenomic. New features like Bond Installment and Secondary Bond Marketplace help create a new strategy for users to make the most profit: (5, 5) together. The major differences between (3, 3), (4, 4), and (5, 5) can be briefly explained as:
- In (3, 3): you buy a bond, you have to wait until their bond is fully vested, then claim and stake to make a profit.
- In (4, 4): you buy a bond, which is auto-staked immediately, and your TOD is compounding with rebase reward. This means that purchasing bonds now equals performing both bond and stake action in the game theory.
- In (5, 5): you buy a bond, you only need to pay a part of it with the bond installment strategy. As long as you pay the debt on time, you can bond even more with the same balance, which equals more rewards from auto-staking. This decision will give a new optimal strategy for profit.
(5,5) differentiates TraDAO as no other OHM fork, including OHM itself, as it allows a more significant amount of bonds to be auto-staked. Moreover, the wallet reputation will be integrated with this product in the form of a reference to decide which user will have more benefits (i.e., lower prepaid rate, lower interest fee rate, higher liquidation discount rate, v.v). If bonders can not repay their debt on time, other users can liquidate their bonds. Their liquidated bonds could be sold on Secondary Bond Marketplace. In the future, with the Trava ecosystem including the Trava Lending pool, Trava Knight NFT,… we thrive on bringing more benefits for users, and the theory (5,5) will become something bigger.
About TraDAO
TraDAO is the world’s first Bonding Protocol with Installment and Reputation Tracking. It is protocol-owned liquidity (POL), accumulating value through such activities of bonding and auto-compounding staking, which are regulated by a Treasury. In addition, TRADAO Protocol will issue a decentralized reserve currency — called TOD. The concept behind the TOD token is that it is backed by a basket of assets in the Treasury that ensures it does not fall below its base value of $1. The TOD token will be released based on the “Mint & Burn” mechanism, managed by no one other than the TRADAO protocol.
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