Crypto
Powerful growth of BOND: not an accident, but a regularity!
Even obscure DeFi projects can be extremely profitable - if they are smartly.
As you know, the relatively new and niche token BarnBridge (BOND) blew up all forecasts in July-August, soaring in price by 800% in a matter of days. To give you an idea of how much this is, the top and most hyped BTC and ETH recovered by 18% and 54% over the same period. Now BOND has predictably rolled back to $6.7 per token, but this pullback looks like a short-term stabilization before storming a new height.
As a reminder, BarnBridge is a cross-chain risk management protocol that offers a set of composite DeFi products for investors. The service of insurance against fluctuations in interest rates and price volatility is now in great demand - therefore, the explosive growth of interest in BOND is closely related to the crisis. 2022 is associated with such phenomena in abundance, and 2023 is unlikely to be more calm.
BarnBridge offers various tranches to investors. Riskier ones offer higher returns, but also carry the potential for loss of capital when investing in BarnBridge product offerings for this type of portfolio building strategy. On the other hand, investors can protect themselves from major losses by investing in one or two low-risk products, rather than simply risking the entire investment package, which may later fail.
Let's explain how this works with a simple example. The manager places the company's funds in the BarnBridge SMART alpha bond pool with ETH along with other users, buying the senior tranche. The senior tranche means that the company only has 30% risk with ETH. Funds will be held in the pool until maturity. Upon expiration, the smart contract automatically sells ETH for any other specified asset and distributes the proceeds according to tranche types. If ETH is worth $100 at the time the pool is formed and reaches $110 by the time it is redeemed, the company only gets $3 (30%) of the $10 profit. On the other hand, if ETH drops to $90 when the pool matures, the company will only lose $3 instead of $10.
On top of that, if a company wants to liquidate its crypto holdings to cover operating expenses before the pool matures, it is possible to do so because the tranches are tradable. Very profitable for large investors, where each percentage of losses means hundreds of thousands and millions in absolute numbers.
It is logical that the number of risk-averse people will only increase during the crisis. This means that the “safety” BOND tokens are simply doomed to growth.
How high can BOND go?
It is important to understand that BOND is a unique and innovative token that could be worth hundreds or even thousands of dollars in the future. Its issuance is limited to 10 million tokens - like bitcoin, BOND is effectively protected from inflationary pressures.
In general, BOND sets the trajectory for the development of the financial system. Just as bitcoin was initially obscure in terms of value, something that at best could buy a pizza, so BOND will inevitably enter the mainstream of financial markets. Simply because he was the first.
The maximum and closest in time value is acquired by tokens, which can be integrated into existing financial institutions. The concept of BarnBridge can be extrapolated beyond creating derivatives based on returns and volatility.
From TradFi's point of view, BarnBridge can be used to improve the efficiency of stock trading. For example, stocks can be listed on platforms such as Synthetix and BarnBridge can make them available at customizable risk. The market is still trying out BarnBridge. However, even according to pessimistic forecasts, it will be possible to receive more than $100 for 1 BOND by 2030. It took BTC a similar growth, since its inception, much more time.
