What exactly are chicken bonds

Unique NFT based on cryptocurrency bond dynamics, where you can join and exit, is the latest development in the field of decentralized finance (defi) and stablecoins.

That’s in LUSD, a DAI-like project where the collateral is only in eth, and there’s a liquidity stable pool. If you have LUSD or even LQTY, their DAO token, you can get rewards by locking up your funds.

“The yield is made up of two parts: users buy ETH at a discount when they liquidate, and they earn ongoing LQTY rewards for providing LUSD to pay off undercollateralized loan debt,” the project said.

So what does chicken have to do with this? Well, you can turn this LUSD into bUSD, or bond USD.

The process of doing this, linking LUSD to bUSD, creates a unique token because each bond is unique. The project therefore thought that since these are NFTs, why not give them jpegs too.

Phase out bond NFTs, October 2022“bLUSD provides users with access to a yield optimizer strategy that amplifies and automatically combines existing stable pool yields,” the project said.

The difference is that you can exit the bond at any time, you can exit, but you won’t get any accrued interest.

Where NFTs are involved, the more you are a user of the dapp, the more likely you are to get unique features.

Of course, if you sell NFTs, you also sell bonds, making this one of the first projects to visualize financial instruments.

So naturally we tried it. First, we had to choose a frontend, as the project did not offer a more decentralized frontend.

Unfortunately, there aren’t many good options out there, so we chose DefiSaver only because we’ve heard of it and can be reasonably sure it’s a credible dapp.

Creating Chicken Bonds, November 2022Creating Chicken Bonds, November 2022

It says 110, but we’re using a 100 LUSD bond. We first have to create a smart wallet. This seems to be a new development on the front end of these aggregators, which appear to use different “smart wallets” that may have a lock-in effect.

We didn’t even know what it was at first, but it’s a smart contract that acts as your wallet, allowing the wallet to have full Turing-complete functionality and automation, such as automatic compounding, stop loss, etc.

Ethereum Fees, November 2022Ethereum Fees, November 2022

We paid about $20 for this wallet that we didn’t even want, but anyway, we at least got a glimpse of Ethereum’s new network fee structure.

We’re pretty capable at handling network fees and correcting errors or auto-suggestions when we want to be cheap, but now we’ve come across something new, so we’ve stayed the same at the beginning.

However, we should probably change the maximum fee, another new development is “private transactions” to avoid miners extracting value (MEV).

The way these private transactions work seems to be that the “order” first goes to the private pool, and from there it goes to the actual location, which means more transactions are made, so we pay higher network fees.

At the end of the day, we want to turn it off because it probably doesn’t make sense for such a small amount, but MetaMask doesn’t give any guidance on how you can do that.

Anyway, we have a simple transaction to approve the LUSD action, followed by another smart contract transaction to create the actual bond, which also cost around $20.

Chicken Bonds on DefiSaver, November 2022Chicken Bonds on DefiSaver, November 2022

So this is the bond. We have less bLUSD as it is now worth $1.22 and was worth $1.20 when it was created yesterday. What’s more, we only have 26 cents, because there is a curve there, so we have to wait about three more weeks to break even, which is 100 LUSD.

Only after that did we start making money. According to the calculation provided, in one month, we will earn $10.

At that time, around Christmas, we should rebind the sentence so that we can put in 110 LUSD and thus get about 11 LUSD in two months to rebind again.

A small amount, probably won’t make a difference, but this gives us 10% interest a month after breakeven, assuming it continues to curve up after December.

This is obviously a huge gain and if the peg takes a risk then this 100 LUSD might be used to recover it, although we can get out. However, if all goes well, the dapp will basically automatically provide us with the dapp user’s fees, such as clearing fees. cool.

Chicken Bond Trading, November 2022Chicken Bond Trading, November 2022

This is how it actually looks. We just gave you a $15 burn fee, so Thanksnode, the actual fee paid is not bad, $16.

Then you can see what the smart wallet is, a DSProxy, which is apparently what MakerDAO uses for DAI minting, so this wallet can be reused by Maker.

The dapp has sent funds from our address to the smart wallet, from that wallet we moved to the bond contract, we printed $240 worth of LQTY, the LUSD ended up in the stable pool, and most importantly, we got the NFT.

Except we can’t see this NFT, jpeg. It’s not showing up on OpenSea probably because it’s in a smart contract wallet and OpenSea doesn’t know what to do with that.

We do have NFTs, it’s just that we don’t have the egg visualization for bond creation, the egg is obviously algorithmically generated by the smart contract itself, so the jpeg is on the blockchain.

However, since we can’t see it, NFTs are a bit unreal. Sorry chicken. Otherwise, it’s a very smooth test run, actually one of the smoothest from a UI perspective, and we’ve done many, many test runs.

It’s just the faucet, aaaa charges, the faucet. Because of these fees, it’s not something you should do with a small amount. We’re just running a trial run, but in practice you might want to start with a base of at least $1,000 even though the current fees are low.

Unlike apenodes, you may also want to do some research before telling MetaMask that they can use private transactions or use a smart wallet. For the latter in particular, you might want to use a dapp that uses the most interoperable smart wallets, or if you don’t use any smart wallet features, preferably a dapp that doesn’t use them at all, as their use does Added cost as we first saw arguably unnecessary smart wallet transactions.

Given network congestion, you’d expect developers to provide efficient methods rather than encourage unnecessary transactions, but locking is certainly tempting.

Especially since if we wanted such an extra transaction, we could go to the second layer, but it’s not really clear why such a transaction is not offered other than locking.

We keep saying locked because the only other dapp we are familiar with points out that these bonds, InstaDapp, use different smart wallets… which means different addresses for us and therefore higher cost to move.

Anti-synergy tools, probably too powerful after a single test, all are fairly new as this is the first time we’ve encountered them in the wild.

However, at least in this case, where these two dapps are involved, what has happened could become a real problem if the dapps don’t find a solution.

However, as far as the project itself is concerned, there is not much to point out, as everything went smoothly.

A day later, we are now up 24 LUSD, or 20 bUSD, not sure if they are the same until we rebind, but it shows that the curve is clearly working.

So in this case we just have to wait for it to do its job and earn our fee. In many other potential scenarios, the base fee is of course fixed, so if you lock in $1,000, you get $100 over two months, which is about $80 in profit minus the $20 fee.

Will the price of eth rise by more than 10% in two months is a question no one can answer.

Make this bond a more “less risky than eth volatile” alternative, but with potentially lower returns depending on what eth does.

However, in terms of USD vs LUSD, even a 10% annual gain is miles above anything the banks are offering.

However, LUSD is riskier, but in general, logically, if you bank your money at 2%, the project might be better suited to spend 10% of those savings in higher segments of the market Risk of sending it to this dapp.

So as defi continues to evolve and from a front-end usability standpoint, it becomes much smoother to make it interesting.

Source of information: Compiled from TRUSTNODES by 0x Information.The copyright belongs to the author and may not be reproduced without permission

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