Barnbridge (BOND) is a unique project in the market that seeks to reduce risk through the creation of tokenized risk protocols. The network is introducing a crypto hedge token, smart bonds, and debt pools. Together, these systems bring together the main DeFi protocols with the aim of providing a standardized risk curve and derivatives for risk mitigation.
What problems is Barnbridge (BOND) trying to solve?
Barnbridge seeks to provide investors with a tailor-made experience to meet their risk appetite. Research has shown that capital continues to flow into higher risk return streams. This trend is by no means new, but has been exasperated by the increase in debt created by the COVID-19 pandemic.
Barnbridge is the premier cross-platform derivatives protocol for all fluctuations. The network allows investors to hedge against yield sensitivity and market price using different pools. The system reduces the risk of digital assets and the sensitivity of the return of digital assets in several ways. Specifically, it divides these assets into smaller, separate, dollar-denominated portions called tranches. The network then creates derivatives based on these tranches.
Barnbridge is creating a whole new kind of derivatives based on risk rather than technical characteristics. This approach allows Barnbridge to squeeze the performance out of many protocols and break them down into higher and lower performance bands. 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 offers investors more protection when needed or more income opportunities. By tailoring the risk of the asset, Barnbridge eliminates one of crypto’s biggest problems: market volatility.
Benefits of Barnbridge (BOND)
Barnbridge allows investors to hedge against return sensitivity and price volatility. The platform allows more aggressive investors to purchase higher risk derivatives to improve the potential for return on investment. Conversely, investors looking for less risk may forgo some potential return on investment in order to access less volatile derivatives of the same investment.
Another major advantage of the Barnbridge network is its tutorial section. The platform offers you various ways to gain a deeper understanding of the platform and the entire DeFi industry. There are support documents and videos that make the onboarding easy for new users.
How does Barnbridge (BOND) work?
Barnbridge presents a selection of new and exclusive systems to achieve its goals. The network uses pooled collateral which is then deposited into loan protocols or yield-generating contracts. The network then groups and separates the yield into different bands.
Oracles play a vital role in the Barnbridge system. These off-chain sensors are used to determine the price of the assets at stake. Specifically, oracles monitor the price of assets at the start and end of the pooling period. This structure better ensures a fair distribution of gains or losses.
Smart bonds are another essential part of the Barnbridge system. Smart bonds can access debt pools over other decentralized financing protocols (DeFi). They allow the system to then create multiple assets within a single debt pool with variable risk / return characteristics.
Investors can evaluate these token returns and debt derivatives to see what best fits their investment strategy. Users can wager BOND tokens in different tranches of various risks. In particular, these tranches rely on the DAO to decide on the next pools to be deployed on the network.
Smart Yield Crypto Bonds offer investors another way to secure their profits. Users can wager these bonds and earn passive rewards based on the characteristics of the pool. Since staking does not force users to relinquish ownership of their assets, like trading, it is viewed by many as a better option. Specifically, SMART Yield allows users to mitigate the volatility of the variable return of other projects in the DeFi market.
Smart Yield users can create tokens representing different risk levels of an underlying protocol, such as deposits on Aave or Compound. The system allows senior token holders to receive a fixed return while junior users benefit from the additional return generated by senior deposits. This is the case when the variable rate of the underlying debt pool becomes higher than the weighted average guaranteed returns of current seniors.
Another cool feature in the market is smart exposure. This protocol passively rebalances two assets in your portfolio. Investors can use this feature in combination with tokenized strategies to improve their ROI results.
The Smart Alpha function works as a two-way protocol. Barnbridge (BOND) users have the option of occupying a senior or junior position on a specific ERC-20 compatible asset using this system. The system allows juniors to pay seniors a portion of the underlying asset during periods of falling prices. However, they receive more of the price if the asset appreciates. Conversely, the elderly benefit from full price protection up to a predefined threshold. For this protection, they accept split exposure during increases in value.
BOND functions as the network’s premier utility and governance token. This ERC-20 token lives on the Ethereum blockchain. It fulfills several roles in the ecosystem. Users need these tokens to pay fees and interact with debt pools.
The Barnbridge Project is a community effort. The network incorporates a decentralized autonomous organization (DAO) to provide users with voting rights and more. Users can make proposals on vital upgrades such as the introduction of new pools, pricing structures or new features and services.
Barnbridge (BOND) – DeFi Continues To Improve Opportunities For Investors
Barnbridge (BOND) takes some of DeFi’s most unique aspects 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 learn a lot more about this team as the benefits of their new concept become better understood by investors.