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How It Works

The Convertible Bond is Solv's debt SFT for any entity featuring a native token (a DAO or protocol, for example) to issue a bond to bootstrap liquidity, cover operations and expenses, or diversify the treasury. Since the Convertible Bond embeds convertibility which gives the investors exposure to the borrower's token's upside, it adds to the incentives of investing in a bond that now offers further returns.
To issue the Convertible Bond, the borrower must back the issuance with a sufficient amount of native token (or any token) as collateral.
Onboarding, due diligence, clearance, and risk management processes that apply to the Bond Voucher also apply to the Convertible Bond, the detail of which will be omitted in this section. Issuers of the Convertible Bond have the same optionality for credit enhancement as they do in the Bond Voucher.

Convertible Bond Basics

Benefits of the Convertible Voucher

Establish On-Chain Credit

As all issuances and repayments are on-chain, borrowers will build up their creditworthiness via an immutable trail of on-chain debt transactions. As DeFi grows in the coming, this on-chain credit will become valuable for borrowers to get better terms in the debt capital markets. Similarly, lenders will establish a good on-chain record of loan execution and be attractive to borrowers who are looking for experienced lenders.

Investor and Lender Ecosystem

Bond Voucher issuers have access to the extensive investor and lender network on the Solv platform. They include top-tier funds, market makers, asset managers, and traditional financial institutions, some of whom are investors in Solv.

One-Stop Platform for Debt Capital

Participants in the Bond Vouchers market will have access to the necessary debt capital infrastructure at reduced costs on the Solv platform, including top-tier, third-party custody, and insurance providers.

Secondary Liquidity

Bond Vouchers are semi-fungible. They can be split up into multiple NFTs and sold in parts or whole if the lender wishes to receive early liquidity before bond maturity.

Portfolio Management

Dashboard for borrowers and lenders to see their real-time portfolio positions and upcoming maturities.

Token Incentives

Participants in the Bond Vouchers market will receive Solv token incentives so that borrowers reduce the net APR paid and lenders receive an increased APR.

Off-Chain Price Discovery

Borrowers and lenders of the Bond Voucher can conduct off-chain price discovery before the bond is issued or auctioned.