Bond App FAQ

What is an SPO Bond?

An SPO Bond is a loan agreement for non-custodial lending of staking rights to Stake Pool Operators from a pool of lenders. A smart contract locks lender’s ADA and allows a borrower to attach their stake key for a maximum duration as long as conditions are met (interest paid).

What is a Borrow Offer?

Borrow Offers are the terms (duration and interest) an SPO is willing to agree to if enough liquidity is provided for their Stake Pool.

What is a Pending Pool?

A Pending Pool is a Borrow Offer that is still pooling funds to completely fill up the required ADA necessary to execute the bond.

What is the motivation for SPOs to use these bonds?

The hardest part of running a stake pool is attracting the first 1M ADA of liquidity because until you have enough live stake accumulated, the staking returns are well below that of the average competitors. This essentially forces new SPOs to ask their delegators for support while offering a lesser return than the average established stake pool. This unfortunate dynamic is the reason most new pools end up having to shut down before achieving sustainability.

What is the motivation for Lenders to fund these bonds?

While liquidity providers receive an optimal and higher return than average when subsidies are included, this product is meant to facilitate and encourage the community’s support of network decentralization by lowering the entry barriers for small and new stake pools.

What are EQ Tokens?

EQ Tokens are placeholder tokens that represent a user’s ownership share of a pool that will fund a bond once full. After bond activation, they can be converted to Bond Tokens.

Can I get my ADA back from a non-active pool?

If you hold EQ tokens and these EQ tokens represent a pool that has not yet been activated (the pool is not full and in the Pending Pools tab of Your Page) a user is able to redeem their ADA from the pool.

What are Bond Tokens?

Bond Tokens are tokens denominating a user’s fractional position of a bond loan. As Cardano Native Tokens, they can be used to interact with the wider DeFi ecosystem, such as being used as collateral in marketplaces and lending protocols. At maturity they can be exchanged for the underlying ADA plus all accrued interest.

What is the difference between EQTs and BTs?

EQTs represent equity of a pool waiting to fill up a borrow offer and can be redeemable for ADA up until the pool fills up and the bond is executed. BTs represent share ownership of an active bond and are only redeemable at maturity.

When can a bond be canceled?

A bond can only be canceled if the SPO fails to meet the terms of the bond by not providing enough interest to stay above the 1 month (six epochs) Interest Buffer minimum threshold.

Is there a penalty for canceled bonds?

At cancellation, liquidity providers receive an additional six epochs of Interest Buffer and can access the underlying liquidity immediately.

Do I have to monitor the health of my bonds?

It is recommended for bond holders to check their bonds remain active and have not been closed at least once a month.

Can I sell my Bond Tokens to access liquidity?

Absolutely, as Cardano Native Tokens you are able to trade Bond Tokens in secondary marketplaces or peer-to-peer exchanges. Whatever party holds the bond token at maturity can then redeem the underlying ADA plus all accumulated interest.

Can Bond Tokens be used as collateral in lending protocols?

Yes, as regular CNTs Bond Tokens can be used as collateral in supporting protocols. As of now, Liquid Finance has committed to onboarding Bond Tokens as collateral and may actually be supported at launch.

Why do EQTs have a weird name inside my wallet?

These are the auto generated Bond Name hashes that link to a specific open pool position.

How do I redeem underlying ADA plus interest at maturity?

You redeem ADA by clicking on the Redeem interaction under theBond Positions > Closed Positions section of Your Page.

What is an SPO PubKey?

An SPO PubKey is any of the Pool Owners or Rewards Account addresses.

Why do I have the option to close bonds that I don't own?

This interaction is permissionless so a bot can automate this transaction and improve the overall user experience.

Why can I pay interest on bonds I haven't issued?

This interaction is permissionless so anyone can donate subsidies to these bonds.

Common Message: “UTXO Inputs not found”

Make sure your wallet is connected to the Preview Testnet network.

Too close to the end of an Epoch

Our smart contracts construct transactions in a way that treats each epoch as a discrete variable, thus transactions for bond purchases are only valid within a single epoch. If you get this error, please submit another transaction in a minute or two.

What is a Verified Bond?

A verified bond is a bond that has been authenticated by the Optim team as belonging to a specific Stake Pool Operator. A verified bond will replace the OPool ID/Bond ID from the automatically generated hash, to whatever the SPO wishes to display in the user interface instead, such as the name of the Stake Pool. This will allow for easier brand recognition and more efficient marketing efforts.

As a permissionless protocol, anyone can technically issue a bond that they can delegate to any pool whether they are verified or not. In order to not cause confusion and maintain transparency, Optim will be verifying bonds manually after being contacted by an SPO that has issued their borrow offer. Only verified bonds will receive OPT token incentives for liquidity providers.

How do I verify a Bond?

If you have not previously been in contact with the Optim team to coordinate and assist you in the issuance of a verified bond, please take the following steps:

Go through the Issue Bond page to issue your borrow offer. This creates the OPool which will be used to pool the liquidity necessary to reach the desired amount before the bond is activated. Send the OPool ID in addition to the name you would like to be displayed in the user interface in an email to [e-mail] to initiate this process.

You will be asked to send 1 ADA to yourself from the account containing your OwnershipNFT. The Metadata of this transaction will need to include details about the bond you are in the process of verifying. Once your verification has been authenticated it will be updated on the website.

Can an OPool (bond borrow request) be cancelled?

A bond borrow requests can be cancelled as long as there are no liquidity providers in the OPool. Reminder that when you issue a bond, the borrower also becomes the first liquidity provider by receiving 1 EQT, this is a necessary step that creates the OPool. If you made any mistakes while issuing your bond, go to your bond's page and click the Withdraw button to exchange your 1 EQT for 100 ADA. Removing all funds gets rid of the OPool completely and once that is done you can go ahead and cancel the bond so you can reissue with the right parameters.

If a borrow request has been unfilled after 14 days of activity, the bond request can be cancelled as well. If your bond was unfilled after this time frame, you might want to increase the interest to entice more liquidity providers into your bond.

What does the Convert button do in a bond's page?

The Convert button is used to exchange your EQTokens that represent equity in a given OPool, for Bond Tokens that represent ownership of an active bond. The differentiation is mostly technical in nature, but enables bond token standardization for use in a wider DeFi ecosystem.