Following Launch ETH2 Internet bonds A few months ago, Ankr’s Internet bond launcher StakeFi announced the launch of an avalanche bond (aAVAXb) wrapped in ERC-20 tokens.
StakeFi will enable anyone holding AVAX tokens Avalanche Network Stake and receive AVAX Internet Bonds (aAVAXb) in exchange on the Ethereum network or Binance Smart Chain.
Avalanche AVAX mortgage mechanism
right now, avalanche Staking generates 5.11% of staking rewards. At the beginning, Ankr will run two validator nodes, the unlocking period is 1 month, and the starting point is delayed by 2 weeks to ensure that there is a window every two weeks ago to return users who are willing to convert their aAVAXb to AVAX 1:1 to start a new one The pledge period of 1 month.
StakeFi users will assign AVAX to StakeFi, which will pledge AVAX in the Avalanche validator node hosted by Ankr. Ankr will charge a 2% service fee for pledge rewards, which is the minimum principal fee applicable to Avalanche pledges.
Avalanche Bond Launchpad function in the initial stage
Avalanche bonds will have similar functions to ETH2 bonds (aETHc and aETHb), which provide liquidity to pledgers and link pledge rewards to DeFi.
Similar to aETHb, aAVAXb will be a reward-earning bond, which means that rewards from Avalanche pledge will be distributed daily through active rebase. In other words, the user’s aAVAXb balance will increase daily in each holder’s wallet. aAVAXb will use the same reward distribution as aETHb through rebase.
Another direct benefit of aAVAXb is that it enables DEX users to invest in aAVAXb through DeFi on the Ethereum network or Binance Smart Chain, where most of the DeFi liquidity exists.
Currently, it is necessary to interact with the Avalanche network to access the Avalanche (AVAX) token, and the liquidity of AVAX on Binance Smart Chain DEX is still limited. Ankr expects that within a few weeks after the launch of aAVAXb, the liquidity of AVAX tokens on the Binance Smart Chain will increase.
Another new feature of the StakeFi Internet Bond launchpad is that you can foreclose/redeem aAVAXb and wait for up to 14 days to redeem aAVAXb to AVAX at a 1:1 ratio. During the 14-day redemption period, Staking rewards will no longer be issued.
Decentralized exchange (DEX) liquidity
Ankr is in discussions with Avalanche token holders and entities to ensure the liquidity of aAVAXb/ETH Uniswap v3First, Ankr also expects that aAVAXb will be traded on multiple DEXs on the Ethereum network and Binance Smart Chain shortly after its launch.
The Ankr team particularly likes to see the potential of aAVAXb/AVAX Liquidity Pool (LP) on the Binance Smart Chain in the future. This will be the easiest way for DeFI users to ensure that aAVAXb is traded at its fair value. In addition, aAVAXb/AVAX LP will also show very low or no permanent loss, which is a very attractive benefit for liquidity providers.
Avalanche Bond Launchpad will launch new features soon
- first of all The option for cancellation/redemption of aAVAXb based on fair value (1 AVAX = 1 aAVAXb) is to redeem aAVAXb and wait for 14 days, as described earlier.
- second The features that will be activated a few weeks after the launch of aAVAXb will be Instant liquidity pool. When this new feature is launched, the 3% of the AVAX tokens allocated to StakeFi will not be pledged and will remain in an unstaking state. Instant liquidity poolTherefore, the holders of aAVAXb will indirectly bear the cost of the instant liquidity pool. Since the opportunity of AVAX is missed, this will represent a 3% staking reward. Therefore, the total cost of aAVAXb holders will be 2% of the service fee, plus 3% of missed AVAX pledge opportunities, resulting in 4.94% (3% of the instant liquidity pool does not charge a service fee). Due to the limited size of the instant liquidity pool, it will provide trading arbitrage opportunities (purchase aAVAXb at a discount on the DEX and redeem it at fair value instantly through the instant liquidity pool), This option will be reserved for ANKR token holders Have a specific number of ANKR tokens (to be defined in the next few weeks).
- third The function that will be activated in a few weeks will be able to redeem and claim aAVAXb Avalanche Futures (aAVAXf). aAVAXf will have an expiration date that matches the closest date to the end of the staking period of the StakeFi validator node on the Avalanche network, up to a maximum of 14 days.
aAVAXf will be issued in the form of non-fungible tokens (NFT) And will charge 0.25% royalties from aAVAXf sellers to prevent avalanche futures from being sold on Bounce Finance platform, Which will open a NFT futures market.
Buyers of aAVAXf will be able to purchase aAVAXf at a small discount and be able to claim the fair value of aAVAXf (1 aAVAXf = 1 AVAX) on StakeFi when it expires. Bounce Finance will charge aAVAXf buyers a 0.25% transaction fee. aAVAXf sellers will benefit from short-term liquidity to receive AVAX tokens.
Buyers of aAVAXf are likely to be able to purchase aAVAXf at a discounted price. If calculated on an annual basis, it may generate a revenue stream that is better than the pledge reward (for example, buying 1 aAVAXf at a discount of 0.5% every two weeks will result in a compound annual interest rate of 12.7%) .
Therefore, investing in aAVAXf can be regarded as investing in zero coupon bonds, which are bonds that do not distribute rewards, but can be purchased at a discounted price and redeemed for a specific amount higher than the discounted price.