New DeFi Asset Class: Why the New Standard ERC-3475 is Worth Watching?

Original source: Decentralized bond ecological platform D/Bond

Recently, the proposal "EIP-3475: Abstract Storage Bonds" submitted by the decentralized bond eco-platform D/Bond received Ether Adopted by Fang Foundation. As an application standard proposal, EIP-3475 provides a new API standard - ERC-3475.

< p>EIP-3475 supports the creation of tokenized certificates with abstract on-chain metadata storage, so that each bond category ID represents a new configurable Token type and corresponds to each category, enabling the issuance of bonds with multiple redemption data become possible.

Under the ERC-3475 standard, any user can customize and issue decentralized, Bonds and financial derivatives with complex structures, such as futures, options, warrants, swaps, etc. Moreover, D/Bond provides a complete financial ecology including the secondary trading market for these bonds and derivatives.

This means that after Swap and Staking, ERC-3475 will open up a new asset class for the blockchain—— Decentralized bonds, which have far-reaching implications for improving Ethereum infrastructure and broadening the DeFi track.

Make up for the shortcomings of DeFi bonds

DeFi is considered to be a decentralized "parallel world" of traditional finance. TradFi market savings, lending, asset management, trading platforms, derivatives, insurance, funds and other formats can all find corresponding mirror images in DeFi Scenes.

However, as one of the basic financial instruments of TradFi, the bond has not yet appeared on the blockchain Centralized bond products. Although there are also some fixed-income products, they have not aroused great repercussions.

This is because bonds are often divided into different categories according to their particular type. According to the method of interest calculation, there are fixed-rate bonds and floating-rate bonds; according to credit risk, there are secured bonds, surety bonds, unsecured bonds, etc.; Long term bonds over 10 years; by repayment terms...

In the past, the industry lacked a technical standard and DeFi protocol to support the issuance of complex interest-bearing bonds. Take the current most common Token standard ERC-20 standard as an example. It needs to deploy smart contracts for each bond separately according to the type of bond. Different types of bonds are not compatible, which obviously cannot meet the needs of bond issuance with complex data structures. .

And due to the different types of bonds, ERC-20 tokens must be issued based on the existing DeFi protocol It is also almost impossible to provide bond products for liquidity pools, because ERC-20 tokens do not have complex data structures.

In addition, ERC-20 does not support the storage of bond return and redemption logic on the chain, because this will lead to high gas cost.

Obviously, if DeFi wants to get involved in the bond field, it urgently needs a new standard that supports complex data structures and multiple redemption functions. Previously, due to the absence of this standard, DeFi has always been powerless in the field of fixed interest rate products-it is impossible to develop smart contracts with clear terms such as rate of return, repayment conditions, interest rate, and maturity date.

While ERC-3475 has a complex data structure, ERC-3475 token can store more bond information to support developers Building more complex logic for its bond redemption and return mechanism will fill in the gaps of DeFi in the fixed income market.

A major upgrade to ERC-20

p>

ERC-3475 is a brand new smart contract interface standard for issuing and managing multiple callable bonds.

Under the ERC-3475 standard, a single contract contains any given number of bond types, bond random numbers, The standard provides stand-alone functions to read, transfer any collection of bonds, and allow bonds to be redeemed from the bond issuer when certain conditions are met.

The complex data structure gives ERC-3475 token enough flexibility to support A variety of redeemable bonds, each bond is assigned an independent algorithm, no need to deploy additional smart contracts. That is to say, one contract can manage multiple bonds of different types, different interest rates, and different redemption conditions, which is not only convenient and efficient, but also more economical, which can save users gas costs.

Based on the ERC-3475 standard, not only standard bonds in the traditional sense can be created, but also forward, futures, options, Binary options, warrants, swaps and other more complex financial derivatives, including off-chain derivatives. Users can package existing bonds into derivatives covering different risk-reward combinations and trade them on D/Bond DEX.

In addition, automated market makers (AMM) need to use separate smart contracts and ERC-20 LPTokens to manage trading pairs, which It also greatly reduces the overall liquidity of LP, and consumes unnecessary gas fees, and also causes transaction delays due to network congestion.

Automatic market maker (AMM) under the ERC-20 standard needs to use a separate smart contract and LP token to manage trading pairs Different, ERC-3475 uses a multi-layer liquidity pool to support larger LPs to create many trading pairs. Since each bond stores all its necessary data (such as bond supply and type), ERC-3475 does not need to issue a separate contract every time a new LP pair is added, which not only greatly improves the liquidity of LPs, but also saves It saves the gas fee and avoids the risk of being attacked. Therefore, ERC-3475 will greatly simplify the management of LPs.

Simply speaking, ERC-3475 is an upgrade to ERC-20 LP token, converting it to A multi-dimensional token that stores metadata.

With this, D/Bond will bring a promising blockchain asset class to global users, allowing more Individuals and institutions issue different types of bonds and financial derivatives, and provide a secondary trading market. Here, bond issuance, investment, trading, redemption, etc. no longer need to rely on intermediaries such as traditional banks, which not only eliminates user access thresholds, but also saves various troubles and expensive costs brought by intermediaries.

By solving the blockchain Due to the lack of tradable bonds and financial derivatives on the Internet, ERC-3475 will greatly expand the Ethereum ecosystem. Based on ERC-3475, D/Bond will open up a new decentralized financial track and open a new era of global finance.

This article is from a contribution and does not represent the opinion of Rhythm BlockBeats  

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia