AMA #1: Paul Mak (CEO) and Brian Pasfield (CTO) Answer Your Twitter Questions!
The wait’s over, Bonders!
You asked your questions, we read them, and we replied to (almost) all of them. Welcome to the first edition of our AMA with CEO Paul Mak and CTO Brian Pasfield!
Let’s go right into the reason you’re here. Behold!
(Note that, since there are no space limitations in here, we left your questions unedited)
Could you tell us more about the role of the $Bond stable coin (USB) in the ecosystem?
Brian Pasfield (BP): Let’s first distinguish that the BOND token is our governance token whose price is market-driven, while the USB Stablecoin is Bonded Finance’s USD-pegged crypto-backed stablecoin.
Bonded’s USB Stablecoin (USB) drives a dedicated Stablecoin Platform, playing a crucial role in the Bonded Finance ecosystem. The USB Platform accepts various speculative assets and collateralises them with USB to create a lending market. This effectively allows altcoin holders to leverage their capital while maintaining exposure and ownership of their collateralised holdings. The utility of a stablecoin in our platform is similar to the TradFi practice of capital pooling to solve liquidity issues. With USB, we are creating a sort of fungibility or recognition (a stablecoin) for alternative assets to aggregate assets, meeting borrowing and lending demand. Without the stable coin, we are essentially back to square one, i.e. an altcoin that is siloed to a trading market and can’t be collateralised.
Whilst Bond’s staking solution isn’t up and running, will the potential fees BOND platform stakers would have received go into a reward pool, or will they just go into the platform treasury? If the latter, will these be redistributed once staking is live?
Paul Mak (PM): The rewards we allocated to pre-product initiatives were just our way of saying thank you to a supportive and patient community. They were also intended as a way to distribute the token through incentives. Moving forward, the rewards will be allocated to boost network productivity. We want to reduce sell flow as demand for network participation increases. That said, our earliest participants will continue to be rewarded.
Past Medium articles have talked about the “countless hacks & exploits” from, BUT how can you show to the BondedFinance community that the platform itself will be as safe as possible, from potential hacks? Are there more rigorous audits being performed? Maybe multiple auditors, whose client’s platforms haven’t been hacked/exploited, assuming that the hack wasn’t caused by careless actions of the smart contract owners?
BP: Every project needs smart contract audits. However, we also recognise that audits in the past have left countless projects with vulnerabilities. Therefore, we have adopted a defensive strategy that consists of multiple aspects, as follows -
- Our core developer team is sourced from a firm that is also recognised as a smart contract auditing firm. A preliminary review will be undertaken by the auditing arm of that firm.
- We have engaged multiple external smart contract auditing firms — which we will have conduct audits on the smart contracts we have developed and are still to complete.
- We now have internal, seasoned, smart contract developer resources, experienced with auditing, who will additionally review the smart contracts.
- Smart contract design documentation is a key component of this strategy. We circulate smart contract designs as early in the development process as possible to allow the quality assurance and audit teams to familiarise themselves with the deliverables, ask questions early and prepare for when audits are undertaken.
Are you able to disclose which stable coins “Lenders” can utilise, on the platform? So far, the Medium articles have mentioned Dai, USDC and USDT, but will the exhaustive list include all of the largest stablecoins, like BUSD, PAX, DAI, UST etc.?
PM: Given that this is a release and something that will be iterated upon, we will roll out with a single stable coin, and this will be USDC. In the spirit of everything we do, the rollout will be deliberate and conservative by design. We will begin with USDC exclusively and integrate others from there.
Can you please elaborate on the liquidator role, in terms of:
1) steps from “Borrower” to “Liquidator”, and
2) payments made from all parties (Borrower, Liquidator, Platform and also rewards/payments to BOND Stakers)
BP: A Borrower’s collateral value for a loan position can approach the loan position’s Liquidation Threshold when either their interest charges accumulate against their loan position or when the collateral backing their loan experiences a fall in market value.
- When the collateral value falls under the Liquidation Threshold, it now becomes subject to liquidation by Liquidators.
- Liquidators will submit transactions to the mempool to liquidate a loan position — in which the Liquidator pays back the stablecoin loan amount. In return, the Liquidator receives the collateral held in the loan’s Collateral Safe. This collateral amount is more than the loan amount repaid by the Liquidator and is sufficient to cover a reward for the Liquidator and the Liquidator’s on-chain mining fees.
- Additionally, the Bonded Finance platform takes a fee from the liquidation — which is added to the BOND rewards Pool for distribution to BOND stakers.
Is BondedFinance the first project to work with Chainlink in implementing a “Tiered” Oracle system? Also, I am having difficulty following the technical progress updates side-by-side with the roadmap, as all the terminology seems out of sync. Will a glossary be put together at some point, because at the moment, navigating the BondedFinance information is a tough ask?
BP: The whitepaper will address these types of issues. This documentation is being refined daily.
Will the BOND staking on Ascendex be offered until platform staking is available?
PM: This, to be candid, is a game-time decision. We were very aggressive about unlocking lots of rewards early and often, which came back to bite us to some degree. The overarching goal has always been broader distribution, and staking helps accomplish that up to a point. We wanted to incentivize our longer-term holders and appreciate their patience, but the token is of value and will be treated as such going forward. With all this in play, it will be an informed decision made closer to deadlines. My inclination at this point would be to continue them in some capacity just to finish what we started, so to speak.
What are the blockchains that will be available when the platform is launched? and those planned thereafter?
BP: In terms of ‘blockchains’, we will run on Ethereum. The intention is to provide cross-chain collateral support in the future. The decision of which chains will be supported, in what sequence and in what timeframe will be primarily driven by community demand and the ability for other chains to technically support our requirements of security, non-custodianship/trust minimisation, user experience, insurability, breadth of token support, breadth of chains supported, cost and restrictions. Bonded Finance may implement varied solutions depending on cross-chain availability and cross-chain type — as indicated by the following set of considerations -
PM: All of our partners will be included in our early iterations, however, the specific timing for each asset addition will vary based on testing and tier parameters.
Are there any plans to market the platform to the commercial finance industry, or are there any partnerships here that can be announced?
PM: Within our collective network, we have our share of private equity and investment banking contacts. Traditional operators typically move a lot slower than crypto-centric enterprises. At this juncture, many are reluctant due to the startling frequency of exploits in this industry. Nonetheless, they are keeping a close eye, and we’ve all seen an influx of boutique venture firms that fund projects. To date, though, the institutional activity in DeFi protocols remains limited and belongs almost exclusively to stable coin arbitrageurs and early-stage investment. For us, our pathway to Tradfi market penetration is as follows:
- 12-month operation term without smart contract fault (proof of exceptional security)
- Generate > 7% APR with excess $100m net (proof of exceptional return)
The people want to know what will the new ticker be? Also how would that affect current investors?
PM: To ensure we don’t repeat the frustration of having duplicate tickers/brand names, we won’t be prematurely disclosing this data.
What is the application process for a project list as a collateral asset on your Primary Index?
BP: This is the content from the drafted Whitepaper that explains this, as follows:
Submit Candidate Project
The Bonded Finance smart contracts expose a public method to allow a token project to apply to include their token in the Bonded Finance platform.
The Bonded Finance platform provides a user interface to allow new token submissions to be made.
With regards to the “Tiering” mechanism, are there any parameters/variables which could cause one of the alts on the Bonded.Finance platform to switch between Tiers, whilst users are still in a transaction?
PM: Whilst still in a transaction, no. We anticipate the occasional transition of assets between tiers, but this would constitute an infrequent occurrence given that their volatility spectrum is calculated in the tiering formula. Aside from black swan events, our tier system will provide us ample notice regarding any price feed composition changes.
BP: This is the content from the drafted Whitepaper that explains this, as follows.
Accept project to the platform
The Bonded Finance Admin will assess the new token application and, if accepted, will assign a Token Tier to the token and configure it for inclusion on the Bonded Finance platform.
The Token Tier assignment carries an associated set of parameters that reflect the token’s ‘risk’ rating. These parameters are as follows –
· Loan to value ratio (LVR)
· Liquidation Threshold
Different collateral asset types will be assigned different Loan to Value Ratios (LVR) and Liquidation Threshold based on their ‘risk.’
When assessing a new coin, the following criteria determine the initial Tier classification:
What safety measures The @Bondedfinance takes against Flash loan attacks? How will the protocol defend itself against this type of attack?
PM: The Bonded platform does not offer flash loans, nor is it subject to un-collateralized flash loan attacks.
Any plans to deploy on a side chain or layer 1 platform to battle the rising gas prices?
PM: Yes, absolutely. Iterations to come.
Will bonded finance investors have insurance against their collateral, similar to the likes of nexo as an example.
PM: Yes, our partnership with Union Finance is a prelude to our intentions to insure the protocol and further protect our users.
When Cross-Chain (tm) ? How do you plan to build robust TVL out of the gates? How will $LINK / $REN and $MATIC be involved? Any plans for #NFT integration? How can you separate yourself from $RGT and $WILD projects, who are aiming to do something similar (at a more rapid pace).
PM: So that’s five questions. To begin, speed to market is not a precursor to success. Historically, it is often quite the opposite in tech, or we’d all still be using Netscape. Philosophically, we don’t really see anything as competition per se. This is a large market, and the more validation/proof of concept there is, the more it attracts TVL to the space. There is plenty of room, and overall, we’ve promoted cooperation amongst our brethren, particularly with the protocols looking to cross the crypto chasm into investment grade markets. Cross-chain is in our purview, and we have a very interesting theoretical framework that could really rattle the cage. How that goes in testing is a question mark, but it is certainly in our scope.
Regarding the when, no one is looking past what is in front of us. And that is deploying a lending and borrowing market for altcoins that aspire to generate higher-than-average returns for investors over a 12-month period. We do that, and, commercially speaking, we’ve won. From there, we will scale quickly. As for NFTs — our platform is built for digital ASSETS. That applies to almost any digital product with value. Tokenised contracts and digital property certificates are certainly on the radar. As long as the NFT has a quantifiable value system where we can measure downside and protect lender capital algorithmically, we will be able to support them as a form of collateral in due course. As for the near-term, the focus remains on alts.
Why is there a BOND/UNI pool? Will $UNI be one of the assets on the Primary Lending platform? https://dextools.io/app/ether/pair-explorer/0xc512b6ada1d12c24fd2679ce196ca6ac1a635d6c
PM: Anyone can open a new market on Uniswap.
Are there any plans to introduce any token burn mechanics for the BOND token in the future or a solution to reduce the supply of BOND.
PM: Yes, these are in our scope but not an immediate consideration.
Are we still releasing on Polygon ecosystem? there is a lot happening on the Fantom chain, its the future of defi with @AndreCronjeTech at the helm.
PM: I actually love Fantom, and we agree it is a really interesting protocol solution. I may or may not have already reached out. :P
I’ve always thought Bonded had a unique idea or product. Do you see any competition out there to what you are trying to achieve?
PM: Unique? In a sense, it is, but there are also predecessors in the likes of Compound etc. Lending platforms, in general, thrive off capital exchanges. What is unique in an intellectual property and protocol sense are the methodologies and processes through which one attempts to achieve their vision. It is not unique to say “I have a cryptocurrency idea”, but certainly there are those that achieve it differently and better than others. As it relates to lending, borrowing, i.e. financial services on the blockchain, well…The more assets, the more potential capital and the more potential users. That’s adoption, and indeed how you capture that matters. Pooling altcoins is still relatively unique but what we are building is a way of executing on that would be a point of real departure. The way we are mediating the transaction between lenders, borrowers, and speculators makes us unique. I think we’ve got the best solution in the market but let’s let the market ratify that.
What is the main advantage of owning your token BOND?
PM: More control, more access, more capital and a type of equitable exposure in the success and growth of the platform.
With the high gas fees on ETH I and other investors have not withdrawn our tokens from the LP pool. Are we at risk of losing the reward if we wait too long?
BP: The reward balances will not be affected — irrespective of prevailing gas fees.
Hopefully, you guys read this: In regards to Tier 0 assets, I see you consider wBTC a tier 0. Are you going to take less popular wrapped BTC and Eth products like RenBTC, sBTC, stEth, etc?
PM: The tiers are a guideline and an easy way to understand our risk model at the highest level. The less established a given altcoin is, the higher the tier ranking. In terms of what’s mentioned here as considerations, we’d certainly be open to the possibility, but we are a platform built for altcoins. We have never strayed from this as a vision, so the Tier 0 assets are not in purview. We are interested in the altcoins that have not had access to the same financial instruments as many others. Call us Tier 1 to 5, and should that ever change, you’ll be the first to know.
Given that the scope of BondedFinance has evolved tenfold since its launch, and that the original Litepaper is therefore dated, should we expect a Whitepaper, or will the updated documentation simply be an updated Litepaper?
PM: Absolutely, we have a WP — we will let you know when we will publicly drop.