I am new to crypto and have been wondering how I can contribute. I don’t understand why yearn could look to release a form of an issuance bond out that has a considerably lower APY at a fixed rate to hedge other market risks. From researching, I see this bond market currently in crypto is very bad, and I have an idea to put together a corporate issuance bond from yearn. I like to call it a Protocol bond. I think there is a way to do this. Introduce a uniquwe bond market and crypto and secure the returns for people. If you think this is even possible or are interested tp hear my proposal, please lmk. I think this could be another layer for both yearn and in the larger picture, crypto.
Floating-rate bonds allow someone to immediately fill up the debt of one or more fixed-rate bonds (Deposits in the fixed yield pools) using their own money, and in exchange, they would receive the yield generated by those deposits. Given that each stake would generate enough profit to cover its deficit as long as the average interest rate during the deposit period stays above 75% of the initial value, a bond buyer would earn a profit as long as the interest rate doesn’t drop by more than 25%.
Not only do floating-rate bonds significantly reduces the risk of depositing into, but it also provides a brand new financial product that allows users to long the interest rates of lending protocols. It’s similar to some other products that will enable people to be long and short interest rates (LSDai), except floating-rate bonds provides a profit even if the interest rate drops (as long as it doesn’t drop by more than 25%), and provides even more yields if the interest rate rises.
It’s like leverage-longing the interest rate!
I believe MPH does something like this right now. It could be a cool addition over here