Optim Finance Proposal Shows Cardano’s Economic Cogs Interaction
According to ADA Whale, an X user who provides information on developments in the Cardano network, the details of a recent proposal show how the economic cogs in Cardano interact. The user noted that the new proposal funds innovation, secures the network, pays people with three different risk tolerances, and maintains liquidity.
Of course the percentages are variable but it shows you how well the economic cogs in Cardano interact. From top to bottom you’ve funded innovation, secured the network, paid people with 3 very different risk tolerances and maintained liquidity.
— ADA whale (@cardano_whale) September 8, 2023
ADA whale further provided the details of the proposal, which includes an ISPO funding of innovation to secure Cardano, Optim Finance, which allows participants to borrow at around 7% interest rate, Liqwid Finance which allows lenders to deposit bonds as collateral, the ability to borrow ADA at about 3% interest rate when needed, the potential of net ADA yields to temporarily go to about 4% and a rising Liqwid ADA supply yield.
A recently-published proposal by Liqwid Finance aims to add support for a three-month Optim Bond Token as isolated collateral in the ADA market. The proposal described Bond Tokens (BT) as Cardano Native Tokens that can interact with the DeFi ecosystem, such as marketplaces and lending protocols.
The proposal further explained that the Bond Tokens can be exchanged for the underlying ADA at maturity, in addition to all accrued interest. The value of every Bond Token is equal to 100 ADA plus the interest on the bond provided by the issuer. In addition to this explanation, the proposal clarified that the three-month Bond Token is the shortest duration bond offered and helps de-risk the duration risk existing before the bonds reach maturity.
The Bond Token is an innovation of Optim Finance, a renowned creator of Liquidity Bonds. It is an innovative financial primitive that enables users to rent ADA delegation rights to power novel use cases such as SPO loans and access leverage for ISPOs.