DeFi bonds, that is bonds based on distributed ledger technology (DLT), have been touted as providing a number of advantages including:
- Faster settlement times – basically in real time;
- Reduced risk via immutability of transactions;
- Greater transparency;
- Lower operating costs;
- Faster issuance, measured in hours.
However, DeFi bonds account for less than 0.001% of the amount outstanding in global fixed income markets, and even less in terms of trading volume. In total, we identified only about 30 issuances of DeFi bonds, and many of these were pilots. However, in 2023 so far, there has been an increase in activity.
Table of Contents
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EXECUTIVE SUMMARY |
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2 |
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INTRODUCTION |
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3 |
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DEFINITIONS |
3 |
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A BRIEF HISTORY |
3 |
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THE PROMISE OF DEFI BONDS |
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5 |
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T+0 OR REAL-TIME SETTLEMENT |
5 |
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TRANSPARENCY |
6 |
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IMMUTABILITY & REDUCED RISK |
6 |
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EFFICIENCY |
7 |
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FASTER ISSUANCE |
7 |
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DEFI BOND PARTICIPANTS |
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9 |
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ISSUERS |
11 |
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TOKENISATION PLATFORMS |
11 |
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DLT OR BLOCKCHAIN PROTOCOLS |
13 |
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DIGITAL EXCHANGES |
13 |
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DEFI BOND ISSUANCES |
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15 |
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SIX |
18 |
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UBS |
18 |
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CITY OF LUGANO |
20 |
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EUROPEAN INVESTMENT BANK |
20 |
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SOCIÉTÉ GÉNÉRALE |
23 |
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SIEMENS |
25 |
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ADDRESSING PROBLEMS |
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26 |
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SLEIGHTS OF HAND |
26 |
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SCHIZOPHRENIA |
26 |
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COMPLEXITY AND CONTRADICTION |
27 |
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RISK UNLOADED ONTO INVESTORS |
27 |
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TOO MUCH TRANSPARENCY |
29 |
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LOOKING FORWARD |
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26 |