We are weaving our way through ideas of how to add value to Polycub and push the platform to become a Financial Supercenter.
There are so many possibilities within the world of Decentralized Finance (DeFi). Unfortunately, a lot is being overlook for the sake of more exotic choices. While those are fine, there are basics that can add to the value of a platform.
Done right, this could really help POLYCUB.
In yesterday's article, we introduced the concept of Polycub Bonds and how they could really help different aspects of the platform.
Today, we will go into a bit more detail about it.
Source
Time Locked Vaults
One of the keys used in the last article is having a 1 year lock up on the Hive blockchain. This was something discussed which would get Hive into the fixed income market. For now, that feature does not exist. The only option is to have a 3 day lock up period.
Thus, we are confronted with how to establish this without the time lock feature on-chain.
Before getting into that, let us look at some of the possible dynamics as put forth yesterday.
So how would Polycub Bonds look?
One would log into the website and take 100 pHBD. There would be a section for Polycub Bonds (please note this is different than the "bonding" discussed in the AMAs) whereby the 100 pHBD would be deposited.
Since each pHBD has an associated HBD with it, 100 HBD would be submitted by the @p-hbd wallet into the time vault. This will earn it 25%.
Now obviously the last part is where we run into a wall. This option is not available so it will have to be altered some.
Nevertheless, we could follow the same mechanics right up to where the HBD is staked for a year. With what we have, it would require moving it immediately to savings.
This would serve as the lock up. While savings can be viewed as an unlimited lock period (over 3 days), we could basically set it up for whatever period is desired. Therefore, if we are having a lock up of 3 years, the platform would just unstake 3 days before the end of the year.
Of course, we run into an issue with the return. Here is where we need to get a bit creative.
Bond Tree
Before getting into the APR situation, let us look at the idea of creating a bond tree.
Do you think it would be good to have bonds ranging from 90 days up to, maybe 5 years. Perhaps you do a tree similar to this:
- 90 day
- 180 day
- 1 year
- 2 year
- 3 year
- 5 year
This could be the basis of the options provided to users. A key is to insert Polycub into the fixed income market. Something like this serves this purpose.
Also, keep in mind the bonds are generated by locking up pHBD. This means that we will generate more revenue for the Treasury with the bridge along with more fees from the pHBD-USDC liquidity pool.
All of this helps to feed the Treasury which is used to ultimately buy POLYCUB from the open market.
Different Interest Rates
Obviously, if Hive is paying 20% for locking up HBD for 3 days, there has to be some incentive to go longer.
Just throwing some numbers together, What is the APR was as follows:
- 90 day - 22%
- 180 day - 24%
- 1 year - 27%
- 2 year - 30%
- 3 year - 33%
- 5 year - 37%
While the exact APRs can be tinkered with, the idea is to provide incentive to people locking the pHBD up for longer terms.
Where does this increased in APR come from? How can we pay out these APRs?
To start, 20% is coming from the Hive blockchain. All pHBD deposited is backed by associated HBD. While some is in savings now, liquidity requirements mean only a portion can be deposited.
However, when we have the pHBD placed in the different "vaults", 100% of the associated HBD could go into savings. This provides 20% of the listed totals.
The rest could come from the same place all other returns on Polycub: from the activity on the platform. We would have to dedicate a portion of the revenue generated to the fixed income market. Of course, this is worthwhile since the platform is not footing the entire bill. Couple this with the fact that we will see more revenues generated and the bond system would likely fund itself.
More Exotic Features Built On Top
Another important point to make is this opens the doors for building even more exotic things on top of what is spelled out here.
As mentioned before, liquidity should be available by having the "bond" tokenized. This not only directs the interest payouts but also allows for people to sell their bonds. Part of the development would be to have an exchange on Polycub whereby people could put bonds up for sale.
Once again, if we make pHBD the focus, this would be the token used for all transactions regarding the Polycub Bonds.
Of course, the exchange would also generate revenues for the Treasury, helping to support the different features.
Please refer to the article linked at the beginning to get more details on that.
What are your thoughts about what we presented here?
In the next article we will discuss the idea of pHBD helping out other application which, in return, provides more value to pHBD.
If you found this article informative, please give an upvote and rehive.
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