Barnbridge (BOND) is a unique project in the market that seeks to reduce risk through the creation of a tokenized risk protocols. The network introduces a crypto hedge token, smart bonds, and debt pools. Together, these systems pull together the top DeFi protocols with the goal to provide a normalized risk curve and derivatives for risk mitigation.
What Problems Does Barnbridge (BOND) Attempt to Fix?
Barnbridge (BOND) seeks to provide investors a tailored experience to meet their risk appetites. Research has shown that capital continues moving into higher risk yield streams. This trend is by no means new but has been exasperated by the increased debt the COVID-19 pandemic has created.
Barnbridge is the first cross-platform derivatives protocol for any and all fluctuations. The network enables investors to hedge against yield sensitivity and market price using different pools. The system reduces the risk of digital assets and digital asset yield sensitivity in multiple ways. Specifically, it breaks these assets into smaller, separate, dollar-denominated portions called tranches. The network then creates derivatives based on these tranches.
Volatility
Barnbridge creates an entirely new type of derivatives that are based on risk rather than technical characteristics. This approach allows Barnbridge to drawl yield from numerous protocols and tranche them into higher and lower yield buckets. These derivatives improve portfolio stability by flattening the risks of price volatility in the crypto market.
Investors can select an investment pool that meets their investment strategy. This approach creates an ideal asset that provides investors with more protection when needed or more earning opportunities. By tailoring the asset’s risk, Barnbridge eliminates one of cryptos biggest issues – market volatility.
Benefits of Barnbridge (BOND)
Barnbridge enables investors to hedge against yield sensitivity and price volatility. The platform enables more aggressive investors to purchase higher-risk derivatives to improve ROI potential. Reversely, investors seeking less risk can give up some ROI potential to access less volatile derivates of the same investment.
Learn
Another major benefit of the Barnbridge network is its tutorial section. The platform provides a variety of ways for you to gain a deeper understanding of the platform and the entire DeFi sector. There are supporting documents and videos that streamline onboarding for new users.
How Does Barnbridge (BOND) Work?
Barnbridge introduces a selection of new and proprietary systems to accomplish its goals. The network uses pooled collateral that is then deposited into lending protocols or yield generating contracts. The network then bundles and separates the yield into different tranches.
Oracles
Oracles play a vital role in the Barnbridge system. These off-chain sensors are used to determine the price of the staked assets. Specifically, oracles monitor the price of the assets when the pool period starts and when the period ends. This structure better ensures a fair distribution of earnings or losses.
Smart Bonds
Smart Bonds are another critical component of the Barnbridge system. Smart bonds are able to access debt pools on other decentralized finance (DeFi) protocols. They enable the system to then create multiple assets within a single debt pool with varying risk/return characteristics.
Investors can evaluate these tokenizing yields and debt derivatives to see what best fits into their investment strategy. Users may stake BOND tokens in different tranches of various risks. Notably, these tranches leverage the DAO to decide what pools are next to be deployed on the network.
SMART Yield
Smart Yield Crypto Bonds provide investors with another way to secure profits. Users can stake these bonds and earn passive rewards based on the characteristics of the pool. Since staking doesn’t require users to relinquish ownership of their assets like trading, it’s considered a better option by many. Specifically, SMART Yield allows users to mitigate the variable yield volatility of other projects in the DeFi market.
Smart Yield users can mint tokens that represent different risk levels of an underlying protocol such as deposits on Aave or Compound. The system enables Senior token holders to receive a fixed yield while junior users benefit from the extra yield generated by senior deposits. This is the case where the variable rate of the underlying debt pool becomes higher than the weighted average guaranteed yields of current seniors.
Smart Exposure
Another cool feature of the market is Smart Exposure. This protocol passively rebalances any two assets in your portfolio. Investors’ can use this feature in combination with tokenized strategies to improve their ROI results.
Smart Alpha
The Smart Alpha feature operates as a two-sided protocol. Barnbridge (BOND) users have the option to take either a senior or junior position on a specific ERC-20-compatible asset using this system. The system enables Juniors to pay seniors a portion of the underlying asset during times of price decline. However, they receive more of the price if the asset appreciates. Reversely, seniors receive full price protection up to a preset threshold. For this protection, they agree to fractional exposure during upswings in value.
BOND
BOND operates as the network’s premier utility and governance token. This ERC-20 token lives on the Ethereum blockchain. It serves multiple roles in the ecosystem. Users need these tokens to pay fees and interact with the debt pools.
Final Word
Barnbridge (BOND) takes some of the most unique aspects of DeFi and creates a new way for investors to profit. The introduction of risk-based investment crypto derivatives is a new concept with endless potential. As such, you can expect to hear a lot more from this team as the advantages of their new concept become more widely understood by investors.
