What is different about HourGlass compared to other bond / lending protocols?
HourGlass Bonds offer a few distinct features:
- Fixed-rate, fixed term bonds
- Zero Liquidation Risk
- Non-custodial IBOs
- Guaranteed early repayment option
How is there zero liquidation risk?
When borrowers default on a loan, they only lose the senior tranche of the collateral in place of the loan they borrowed. To understand more, see Buttonwood docs.
What is a zero-commitment IBO?
An IBO is an Initial Bond Offering. It is zero-commitment in the sense that the IBO (and bond) can be deployed without the DAO moving any of it's treasury DAO-tokens into it. This allows anyone to list a bond on behalf of a DAO without a governance vote. Any borrower/lender/DAO funds are completely recoverable in their original form until the Bond is activated. Once the bond is activated, IOU slips are issued in place of the deposits.
What limitations are there to HourGlass?
At the moment, the main limitation is that new bond slips cannot be issued after the bond has been activated.
How can a DAO get a loan if bonds cannot be issued after activation?
We've designed an escrow which helps facilitate an IBO (Initial Bond Offering). If the deposits into IBO-Box show that there is lending demand, the DAO can use the funds in the escrow to simultaneously issue slips and activate the bond. If there isn't enough demand, the DAO can retract their deposit.
What is the purpose of the penalty?
Since lenders must wait for maturity or issuers to repay the loan before redeeming their bond slips, an optional penalty can be set on the bond so that lenders are compensated extra DAO tokens when the issuer fails to repay the loan.
What can be done with Bond slips?
Bond slips are regular fungible ERC-20 tokens. Anything that can be done with an ERC-20 is permissible including bundling them into yield aggregators, market-making on secondary markets, etc.
Is HourGlass a replacement for ButtonZero?
Not exactly. While HourGlass improves upon ButtonZero by not requiring an AMM or large amounts of liquidity to operate, it has limitations that make it better use for DAO-bonds than commodity asset bonds collateralized by AMPL, ETH, or BTC.