Bonds are coming to crypto with Ethernity Cloud

Great innovation in the crypto ecosystem! Ethernity Cloud is launching bonds and thus offering a new source of financing to web 3 project leaders. For investors, it is a new way to make money thanks to cryptocurrencies. What are they and how do these obligations work?

Reserve Bonds: What are they?

Reserve Bonds are financial instruments designed to offer projects alternative solutions to generate sustainable liquidity. Through these instruments, crypto investors who believe in the project can generate profits by purchasing tokens at an initial price lower than the market price.

The goal of this innovative initiative is to help crypto projects enjoy long-term health by diversifying their funding sources. The benefit for investors is that the price of these reserve bonds varies depending on market conditions and the value of the underlying token.

Reserve requirements: How do they work?

As soon as a user buys a bond, they receive tokens which they acquire over a certain period of time and represented in the crypto wallet by the NFT of the bond. In other words, by acquiring the bond, he receives tokens progressively according to a well-defined schedule. He can then claim these tokens as they are received.

The particularity of this model is that the price of bonds is proportional to demand and inversely proportional to the time that passes. More clearly, four main factors jointly influence the price of these bonds. These are :

• The entry price of the liquidity provider token;
• The price of the exit token;
• The time that has passed since the last bond purchase;
• The demand for obligation.

The combination of these four factors makes it possible to establish a discount on the exit token so as to ensure the competitiveness of the bonds. So, if you buy the token at a price P today, you will not have it the next day at the same price. This discount system is at the heart of bond performance.

How does the discount work on Ethernity Cloud?

Suppose the price of the exit token increases. If the value of the entry token decreases or remains unchanged, the bond discount will increase. In fact, the exit price is higher while the price of the entry token has fallen or remained equal. The two values ​​being far from each other, the discount will be significant.

Now suppose that the price of the exit token decreases. If the price of the entry token increases or remains unchanged, the bond will see its discount decrease. For good reason, the exit token will be acquired at a lower discount, given that it is worth less and the value of the entry token has increased or remained equal. The discount will therefore be reduced because the two price points converge towards each other.

In the event of a negative discount, it will still be possible to purchase bonds and receive the NFT of the bond. However, the downside is that these exit tokens will be worth more than the market value.

It is also worth noting that bonds are purchased through single assets. As the Ethernity Cloud mainnet is on Polygon, where the majority of the project's community transacts, it is MATIC crypto.

In summary, the reserve obligations introduced by Ethernity Cloud represent a major breakthrough in the crypto ecosystem. They offer a new path to sustainable financing for Web3 projects, while allowing investors to benefit from fluctuations in the crypto market. This innovative mechanism is based on a combination of factors, including the price of entry and exit tokens, the time since the last purchase of the bonds, and overall demand. Thus, these bonds contribute to the long-term financial health of projects while offering investors the opportunity to diversify their wallets. With the purchase of bonds carried out through unique assets on the Polygon network, this initiative opens new perspectives in the field of decentralized finance.