Hello, this is kimm. BDollar.fi, a Basis Cash Fork Project based on Binance Smart Chain , announced the news regarding the Bond System upgrade .
As those of you who frequently use DeFi based on Binance Smart Chain, the news of the addition of new projects from Binance Launch Pool or other Yild Farming projects is that the liquidity supplied to bDollar and pancake swaps will drop at once and the price of tokens will be reduced. It has a declining correlation. (Conversely, the liquidity of collateral assets for loans increases toward Venus Protocol)
In addition, due to the characteristics of the elastic supply inflation design of the algorithmic stablecoin, liquidity continues to flow when the price of a stablecoin exceeds $1. In this downside , this upgrade announcement is very important as how well the Bond system works will determine the fate of the platform .
The bond system of other algorithmic stablecoin protocols is not working more efficiently than expected. The disadvantages incurred by bond buyers under current protocols include:
The effect of binding funds (Bond holders cannot recover funds until the price of the stablecoin exceeds $1)
However, when the price again reaches $1 or more, all Bondholders rush to exchange Bond for stablecoins and immediately throw them into the market. This leads to unfavorable volatility in the price of the stablecoin, and again the price of the stablecoin falls below $1.
Theoretically, in this price drop scenario, if the price is not stable above $1, all funds invested in the bond will be permanently lost.
The example above literally shows the vicious cycle of the system due to falling prices. So, the bDollar (Bearn.fi) team will apply a solution that works to the advantage of Bond buyers, and you can learn more about it below.
- bDollar Team Notice: https://t.me/Bearn_Fi_Announcements/78
In short, the upgrade of this Bond System is to prevent a vicious circle by giving a penalty for dumping regardless of the price, instead of giving a degree of freedom to the existing mechanism to buy or redeem Bond for a base price of $1. Purpose.
As the price of BDO continues to drop to less than $1, the claim utility of sBDO is disappearing and the price of sBDO is also falling. The role of the bBDO system is very important.