A company claiming to be the “world’s first crypto bond platform” has announced their launch today.
The platform – Maple – will facilitate the creation and exchange of special bonds called “SmartBonds”, which are secured by interest-yielding crypto assets such as Compound Finance’s cTokens.
SmartBonds will provide the purchaser with a fixed interest-rate return, while enabling the issuer to borrow against their lending position.
How does a Maple SmartBond work?
The first iteration of Maple will integrate with Compound Finance, using the cDai token as its collateral.
cDai, which appreciates via interest on Dai lending, is “locked” into a bond smart-contract. This ensures that it cannot be redeemed until the bond is repaid.
The interest collected on the locked cDai is captured by the smart contract. This is then used to settle the predetermined (fixed) interest rate paid to the bond purchaser, with any remaining interest being kept as profit by the issuer.
SmartBonds will exist as ERC20 tokens, and be exchanged on the Maple Platform with Dai.
SmartBonds for all risk appetites
Maple SmartBonds will be available in different “risk grades”.
These risk grades will differ in their levels of risk and return, determined by the percentage of collateral required to back (i.e. purchase) a SmartBond.
What could SmartBonds be used for?
Maple’s SmartBonds will come in handy for a range of uses.
The most obvious use would be to speculate on (or hedge against) changes in interest rates provided by an asset, on a platform like Compound Finance.
Another possibility is simply borrowing against your lent funds. Extra cash in this scenario can be used to increase exposure to cTokens for a synthetic long position, or even re-lend it via another protocol for diversification.
Maple Beta is on its way
The Maple MVP is almost finished, and currently going through a testing phase.
You can expect to see the public Beta version of Maple launched by mid-November.