After years of FOMO about crypto currencies and digital assets, no-one speaks about digital asset bonds.
Have you ever wondered why?
Digital Assets were born and lived in “to the moon culture” where everything could potentially jump from zero to 1,000,000 in a moment (and do the opposite in the same second).
Armies of weekend traders, incredible crypto-trading algorithms born overnight, tons of financial YouTube experts (disclaimer: Attention! they do not provide financial advice, but only personal opinions to an inexperienced audience) have crowded crypto markets for months, years in some cases, to disappear just as quickly during the crypto winter. They contributed to the idea that immense wealth can be created without competences, licenses, authorizations and control systems.
However, such a crowded market has rarely considered the possibility to seriously evaluate, with skillful analysis to make informed assessments on crypto projects that, perhaps, could have the stability and characteristics to issue digital asset bonds (or something like this).
In the meantime, with the token prices which are more volatile, people could invest in mid-long term projects, wait for annual interest and be given their money back at the end of a set investment period.
Wouldn’t it be an interesting asset to diversify even the most volatile crypto portfolios?
The digital assets market is entirely different from the bonds market. The only bond we have seen in this market (as an independent research company) was in 2018/2019 at the top of the crypto FOMO season. It was a credit linked note based on a mining company, the investors invested in the note to buy ASICS and GPU which contributed to the increase in power of the mining company, with the investors being repaid with annual interest and a repayment of their invested capital after 5 years.
But, why is the digital market not a good market for bonds?
Probably because the idea behind bonds is boring, with no exicing candles on your TradingView chart.
Plus, to evaluate a bond the investors need more competence compared to those necessary to make a “weekend evaluation” on a token and its growth.
In the bond market, the technical analysis and the financial advice (opss sorry the “personal financial opinions”) of “YouTube Trader Influencers” are not so important, they do not have magic formulas or instagrammable charts to draw up a fair assessment of the protocol that will issue the bond.
So traditionally, the bond market is complicated, and probably one of the tightest and most difficult markets to understand deeply in the history of finance, if you want to join seriously.
However, with the growth and stabilization of some important DeFi protocols, which have proven to withstand crypto winter and repeated attacks and scam attempts, with the increase of specialized companies such as regulated financial boutiques and with the democratization of structured financial products, much more accessible and less expensive for issuers it will be possible and probably we will see the issuance of debt instruments, such as bond notes, credit linked notes etc also on digital protocols and DeFi projects that have grown over time and have “strong shoulders” to support and reopen loans to investors.
In recent times, many new companies with skills deriving from finance and the onchain industry such as the boutique of alternative investments Virgil Alternative Investments (www.vaiuk.finance), important data providers such as TheBlock (www.theblock.co), crypto compliance company such as Elliptic (www.elliptic.co) and disruptive protocols for DeFi Insurance such as Amulet (www.amulet.org) are contributing to bring skills and quality tools for the launch of this new and interesting market.
Stay connected to see what happens…
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