Bond installment is a unique bonding mechanism introduced by TraDAO protocol. This feature allows users to purchase more bonds with a certain amount of money and pay the debt later. That means the number of bonds auto-compound staked is higher, and they could earn more money.
Given the purpose of enriching interactions among our ecosystem, we created a second marketplace which was first utilized for two principal purposes: listing and liquidation. The liquidation feature is used in bond installment mechanisms in case bonders are not able to repay their debts in time.
To be more specific, when users select to purchase a bond partially (bond in installment), a timestamp will be set to pay their debts. If bonders could pay off their debt in the repayment period, they would earn many rewards from auto-compound staking. However, if they do not, an appropriate liquidation mechanism is needed. In this case, there are two scenarios:
Scenario 1. Their bonds are liquidated by others.
Liquidators will:
- Purchase total amount of money including initial capital and initial loan of bonders,
- Receive all rewards from auto-compound staking.
- Receive an amount of penalty fee that bonders need to pay
Bonders, on the other hand, will:
- Receive a sum of money equal to 95% of initial capital
- Pay 5% of their initial capital as a penalty.
Scenario 2. Their bonds are not liquidated by any user.
The protocol will:
- Automatically Unstake the volume of assets for which bonders have failed to pay (with the installment percentage)- Burn the installment bonds, and rewards stem from it.
The bonders, in this instance, will:
- Receive 95% of bonds they purchased and the rewards from auto-staking correspond to this amount of bonds.
- 5% of their initial capital will be subtracted and sent back to the treasury as a penalty.
To help users better understand these mechanisms, we provide an infographic, check it bellow:
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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