DeFi Protocol Aims To Enrich the Crypto Market With Digital Bonds

A decentralized protocol wants to bring new value to the cryptocurrency market with the zero-coupon discount bond market and the yield curve.

Investors’ risk tolerance and financial goals often lead to various opportunities. For those prioritizing stability and consistent returns, bonds emerge as a beacon of dependability. The appeal of bonds lies in their ability to safeguard capital and provide a steady income. Bonds are distinctively attractive for investors seeking assurances through features like predictable returns.

The cryptocurrency market diverges itself from traditional finance (TradFi) with its inherent volatility. For investors navigating the unpredictable waters of the crypto market, bonds appeared to be a distant possibility—until now. Thanks to the innovative approaches pioneered by decentralized finance (DeFi) projects, zero-coupon discount bonds emerge as a noteworthy choice in a quest for stability in the dynamic landscape of the crypto ecosystem. Zero-coupon discount bonds, which pay no periodic interest but promise a fixed return at maturity, align with the ethos of simplicity and efficiency inherent in blockchain technology.

Strengthening crypto markets with a new value

Unlike numerous traditional investment models within the crypto space, zero-coupon bonds leverage the decentralization inherent in blockchain, providing investors with a disciplined approach to wealth management. However, there exists a significant volatility hurdle that DeFi projects must overcome. Secured Finance, an interbank-grade DeFi protocol, is constructing a market for zero-coupon discount bonds. The protocol aims to adeptly navigate the volatility inherent in crypto, offering investors a more stabilized and secure investment environment.

Traditional lending models in the crypto market rely on pool-based local interest rates, which don’t accurately reflect the overall market trends, according to Masa Kikuchi, the founder and CEO of Secured Finance AG. Pools, formed by users’ locked funds, are crucial for providing liquidity to most DeFi projects. In pool-based systems, interest rates are determined based on the local supply and demand. Conversely, Secured Finance’s on-chain order book system determines interest rates based on the overall market demand and supply, providing interest rates that reflect broader market trends.

Eliminating the burden of high gas fees

The Secured Finance’s platform elevates transaction transparency and efficiency by establishing a clearing counterparty between lenders and borrowers, sustaining liquidity in the secondary market. The protocol’s framework empowers market participants to dynamically adjust their positions and engage in more efficient and flexible trading.

While most of DeFi favors Ethereum as its blockchain network, a significant challenge arises when operating a complete on-chain order book due to high gas costs. Secured Finance’s lazy evaluation technology ensures the upkeep of market transparency while minimizing gas costs, which is a crucial element for the operation of blockchains. Through the lazy evaluation technology, Secured Finance sets new benchmarks within the crypto market and significantly contributes to the broader financial landscape, encompassing the derivatives market.

Secured Finance is committed to fostering heightened transparency and fairness, setting a novel industry benchmark in the crypto space. “Our innovation is not just a technological advancement—it elevates the market’s overall maturity and creates new investment opportunities,” the CEO emphasized. The protocol aspires to propel the broader acknowledgment of the crypto market within the financial landscape, making it more accessible to institutional and individual investors.