Telos, a global blockchain platform based in the UK, announced on Wednesday the launch of T-Bond Non-Fungible Tokens (NFTs), which is described as a “new fusion” of decentralized finance (DeFi) and NFTs as a tool for unlocking liquidity.
“T-Bonds are an innovation in DeFi that allow tokens to be locked into transferable NFTs that are then unlocked when the maturity date or other maturity conditions are met. These T-Bond NFTs can be sold or traded on secondary markets for investment or as a yield hedge for tokens offering staking rewards, much like U.S. Treasury Bonds or ’T-Bills.’”
While sharing details about T-Bond, Douglas Horn, Chief Architect of the Telos blockchain, stated:
“T-Bond NFTs offer a new and powerful option for any project seeking funding based on future technical achievement. Back in the ICO boom and continuing still, far too many projects have raised funds only to see their token plummet in value and community support dwindle. T-Bond NFTs create an ecosystem where projects can raise funds through investors, who in turn have the freedom to sell their NFTs on the secondary market without impacting the token price. This facilitates a vastly more sustainable model by harnessing the new synergy between DeFi and NFTs.”
Telos further revealed that T-Bonds have a lifecycle with three periods: Creation, Hold/Trade, and Maturity. DAOs or crypto projects of any kind can issue T-Bonds. T-Bond NFTs are sold by their issuer to an initial buyer for another currency at a discount to compensate the issuer for the illiquid nature of the underlying tokens.
“T-Bond NFTs are not technically a bond, because unlike a bond, which is a debt instrument, a T-Bond transfers ownership of the underlying tokens whenever the NFT is sold, so there is never a debt created. Like bonds, the valuation of a T-Bond NFT is the function of its face value related to its expected time to reach maturity relative to alternative forms of yield.”
The first use of T-Bond NFTs will be by Telos itself as it uses existing TLOS reserves to create a large ETH/TLOS liquidity pool on Uniswap as part of the newly released TULIP plan. The sale will be arranged within two weeks.