DeFi Guides

BondAppétit: DeFi Protocol Connecting Real-World Debt Instruments & Ethereum

The main goal of BondAppétit is to establish an infrastructure that acts as a bridge between decentralized finance and traditional debt.
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The main goal of BondAppétit is to establish an infrastructure that acts as a bridge between decentralized finance and traditional debt instruments. The protocol also offers borrowing services for businesses in both fiat and cryptocurrency, with bonds as collateral.

In 2020, CoinGecko reported that the market capitalization of stablecoins is was over $51 billion, and this number reflects an increasing demand for a safer option for holding and transferring assets as measured by value fluctuation in fiat currency terms.

In this setting, many stablecoins have been getting into the market with advanced offerings to the community, and many gained mainstream adoption. But at the same time stablecoins depend a lot on the security and reliability of the custodian, and the biggest concern lies there: the counterparty.

That’s BondAppétit enters the equation.

What is BondAppétit?

BondAppétit is a decentralized protocol targeting connecting real-world collateral with decentralized finance.

The platform was founded by Artem Tolkachev and Sergey Stopnevich, who share the mutual idea of a DeFi protocol with a stablecoin entirely backed by real-world assets with a fixed, regular income.

With that goal, the protocol targets the community of retail crypto investors, sophisticated crypto investors, and businesses interested in achieving access to liquidity in the crypto area.

BondAppétit Features

For the first time, there is one protocol bringing real-world assets as collateral with fixed periodic income. With this in mind, the protocol gives users a combination of its own unique features and the best DeFi features.

A few outstanding features of BondAppétit are as follows:

  • Real-world collateral (bonds): The protocol enables users to pledge real-world assets as collateral in DeFi space
  • Borderless financing infrastructure: Regulated securities and cryptocurrency brokers/dealers can easily participate in the DeFi borrowing through a platform that ties decentralized finances and conventional debt instruments
  • Real fiat cash flows: Real-world debt obligations associated with interest payments can be applied within the protocol to supply governance token liquidity pools with real fiat cash flow.

As an Ethereum-based protocol, BondAppétit has also a wide range of standard DeFi features, alongside those mentioned above

These features include:

  • Smart contracts built on Ethereum
  • Stablecoin bound to protocol assets
  • Community governance token which increases its worth along with the benefit and progress of the protocol
  • Community incentivization framework with protocol profit sharing and liquidity service.

BondAppétit Governance Token

Building a fully decentralized governance structure is what BondAppétit is pursuing with its governance token (BAG). The token will act both as the main tool for decision-making in protocol and as the main reward and incentivization tool for anyone who joins in the community and protocol.

BAG is an ERC-20 token developed on the Compound Governance system that enables the community to handle the protocol transparently and safely. In addition, with Compound Governance, holders can also delegate voting rights to another member.

To execute a given action, a majority of token holders must vote on a certain proposition. It could be the addition of a different class of asset, the adoption of adjustments in the payout rate for engagement in liquidity pools, alterations in smart contracts and many more.

How Does BondAppétit Work?

Native stablecoin BondAppétit USD (USDap) is the main asset within the protocol’s infrastructure. USDao is maintained attached to a sufficient collateral at a constant ratio of 1 to 1 with the US Dollar.

This means that for 1 USDap in existence, there is one US dollar deposited in the system.

When there is a purchase, BondAppétit will generate an amount of USDap equivalent to the dollar amount you buy at the rate of 1USDap = 1 USD and vice versa.

The total number of USDap circulating in the market will always be the same as the actual amount of USD deposited in the system so that the value of the token can be trusted.

The prices of USDap are properly settled on the basis of a pool of real-world debt obligations in the protocol. The collateral records can be verified at any time via the blockchain.

Holders of the BondAppétit Governance (BAG) token will take control over the protocol governance. All main decisions concerning BondAppétit are permitted to the holders of BAG. A single majority of token holders must vote on a particular plan to implement such acts.

The borrowing mechanism is designed more conveniently for borrowers and complies with the regulatory, financial, and contractual conditions. Assets can be transferred to borrowers in both fiat and crypto form.

Users can stay updated with the price through Compound Open Price Feed, an oracle that enables price data to be reported using a known public key, which can be sent on-chain.

The protocol codebase is run on GitHub and preserved by the community. The protocol uses Synthetix StakingReward for staking—a contractual settlement for distribution in a short time span of the tokens to secure liquid assets of LP tokens.

BondAppétit Launch Phases

BondAppétit launch will consist of 3 phases, and each phase targets a specific goal.

Here are the 3 phases:

Phase 1. Investment Stage (April 2021 — July 2021)

Liquidity generation is the main focus of the first phase. BondAppétit intends to draw sufficient liquidity for USDap on Uniswap. Users can lock up their funds for a period of 3 months in exchange for a UsDap/USDC investment in the protocol.

In an attempt to achieve this goal, the protocol plans to distribute 5% of the initial BAG offering as a reward to those who participate in the first phase.

Likewise in this phase, BondAppétit looks to raise funds from the interested investors. The protocol will host an offering of BAG on the open market as a call to investment.

The protocol is intended to capture $1.2M. $1M is used for RWA purchase and $200,000 is used for customer costs payment for conversion and technical costs or protocol maintenance.

Phase 2. RWA Collateralization (July 2021 — 2023)

The protocol will proceed to the next phase after raising funds.

Upon purchase of RWA, the protocol will secure these resources, strengthening USDap and providing the first genuinely RWA-supported stablecoin on the market.

In addition, the protocol starts capturing gains at this point and distributes coupons from possessing the RWA to BAG token holders.

Phase 3. Direct Investment (Q1 2023)

Phase 3 is the final stage of BondAppétit Launch. At this stage, BondAppétit projects the capitalization protocol to exceed $100m.

BAG tokens issuance is set to be done at this point on the open market. Users can now make purchases using USDap directly from the protocol.

This will boost the protocol’s adoption, given the BAG is no longer released.

Overall, interested participants can acquire BAG on Uniswap or other exchanges at market price or in investment round at a special price.

Additionally, BAG tokens can be shared to participants who lock their USDap/BAG into liquidity pools or purchased during the initial offering of the latest USDap protocol tokens.

It is important to note that the protocol makes the decision of new token issuance in order to avoid BAG exhaustibility.

Token holders will take all control over whether new tokens will be released or not.

Conclusion

BondAppétit is entering a market that is big on popularity, but sometimes lacking in transparency.

Its platform helps users to know that their holdings are actually backed by something valuable and that they will be able to redeem their stablecoins when they need to.




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Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology.

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