DeFi Insight: Liquity’s Chicken Bonds

What are Chicken Bonds?

Chicken bonds are a unique bonding model which is gamified and provides better guarantees and less downside for users than existing approaches. Bonders will benefit from principal protection: they will always have the option to cancel their bond and claim their principal back. Rather than purchasing or renting liquidity, the system freely acquires treasury assets over time in a self-bootstrapping manner. Liquidity acquisition is incentivized by the amplified yields that are attainable by bondholders. Bonds accrue a virtual balance of boosted LUSD tokens(bLUSD) over time. At any time, the bonder may choose to claim their bLUSD(“chicken in”) in exchange for their LUSD or cancel(“chicken out”) their bond to recover their deposited LUSD. Another innovation is the gamification part of the mechanism. The protocol features dynamic NFTs, which will evolve based on the user’s interactions with the protocol.

Figure 1: Chicken bonds dynamic NFT. Source: chickenbonds.org
Figure 2: Chicken bonds deposited over time. Source: dune.com

Protocol Design

The underlying sources of Chicken Bonds yield are: the Stability Pool and the Curve LUSD/3CRV Pool. The auto-compounding is handled by two other protocols: Yearn Curve Vault and B.Protocol:

The classification of LUSD according to the ITC:

Figure 3: The LUSD Tokenbase entry (Source: https://itin.itsa.global/YRPSQWDT8)

The International Token Standardization Association (ITSA) e.V.

The International Token Standardization Association (ITSA) e.V. is a not-for-profit association of German law that aims at promoting the development and implementation of comprehensive market standards for the identification, classification, and analysis of DLT- and blockchain-based cryptographic tokens. As an independent industry membership body, ITSA unites over 100 international associated founding members from various interest groups. In order to increase transparency and safety on global token markets, ITSA currently develops and implements the International Token Identification Number (ITIN) as a market standard for the identification of cryptographic tokens, the International Token Classification (ITC) as a standard framework for the classification of cryptographic tokens according to their inherent characteristics. ITSA then adds the identified and classified token to the world’s largest register for tokens in our Tokenbase.

  • The International Token Identification Number (ITIN) is a 9-digit alphanumeric technical identifier for both fungible and non-fungible DLT-based tokens. Thanks to its underlying Uniform Token Locator (UTL), ITIN presents a unique and fork-resilient identification of tokens. The ITIN also allows for the connecting and matching of other media and data to the token, such as legal contracts or price data, and increases safety and operational transparency when handling these tokens.
  • The International Token Classification (ITC) is a multi-dimensional, expandable framework for the classification of tokens. Current dimensions include technological, economic, legal, and regulatory dimensions with multiple sub-dimensions. By mid-2021, there will be at least two new dimensions added, including a tax dimension. So far, our classification framework has been applied to 99% of the token market according to the market capitalization of classified tokens.
  • ITSA’s Tokenbase currently holds data on over 4000 tokens. Tokenbase is a holistic database for the analysis of tokens and combines our identification and classification data with market and blockchain data from external providers. Third-party data of several partners is already integrated, and API access is also in development.

Remarks

If you like this article, we would be happy if you forward it to your colleagues or share it on social networks. More information about the International Token Standardization Association can be found on the Internet, on Twitter, or on LinkedIn.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
International Token Standardization Association

International Token Standardization Association

283 Followers

The International Token Standardization Association (ITSA) is a not for profit organization working on holistic market standards for the global token economy.