Bond module

[tonda100]

MVP User Stories

These stories will be implemented in the minimal viable product.

Emit Bond

As an bond issuer I want to be able to emit (issue) a bond batch, so that I am able to resell the bonds to the investors.

Sell Bond

As an bond holder I want to be able sell the bond, so that I can liquidate its value.

(Used also for the underwriting - first transfer to the investor based on a contract.)

Additional User Stories

These stories will be implemented in next phase(s) to acheive full functionality.

Issue Carbon Credits

As an band AND credit issuer, I want to issue credits connected to the bonds, so there is a proof of link.

Possibly can be also done by individual credit batch issuance and subsequent linking batch and bond.

Mature Bond

As an issuer, I want to be able to mature the bond (finish the bond lifecycle), so the bond holders can liquidate its value.

Put Bond

As an bond holder, I want to put the bond, so that I can liquidate its value before maturity.

Call Bond

As an issuer, I want to call the bond, so I can buy from the current bond owner the bonds, before the maturity.

Attributes

Bond Emission

Bond emission is single issuance of the bonds of one issuer granted the authority to issue bonds related to one project issued at a single point in time.

Attribute name	Attribute type	Note
Emission denom		unique identifier of the bond emmision
Bond name	text	display name of the bond
Issuer	wallet
Emission value	number	- value of the whole batch. FaceValueAmount?
Emission currency	text	FaceValueCurrency?
Fraction / Precision?	number	to what degree the facevalue can be divided?
Project id	text?	"link" to the project using the bond as financing
Issuance date	date	Date of the issuance of the batch
Maturity date	date	Date of the maturity of the batch
Collateral type	text	What collateral is there on a bond, if any?
Underwriting fee	percentage?	What is the fee for the first sale (issuer → owner). Percentage or flat rate?
Coupon rate	percentage?
Coupon frequency	text
Taxable	bool
Callable	bool	Can the bond be called by the project/issuer before maturity?
Puttable	bool	Can the bond be put by the owner back to the issuer before maturity?
Negotiable	bool	Is the bond tradeable on the secondary market?
Credit Batches	array	IDs of the credit batches

[dtkong]

Thanks @tonda100 looks like a reasonable starting point!
1/ can a bond be transferred from an investor to another account? once the contract / bond has been initiated? Negotiable implies this is possible.
2/ how should one expect the bond collateralization and the call/puts to work? i personally don't think i would include these features in an MVP as it introduces significant complexity. alternatively, if it were to be included, what is one streamlined use case?

[yddgd]

hello @dtkong, I will try to answer that.
ad 1/ yes, it can. the Negotiable can be used for the case when this is not desired. Some secondary market similar to the carbon's "Simple Order Book" would be helpful for human-readable trading.

ad 2/ the idea is to use the same concepts as with regulated bonds, but the functionality itself would not belong to the MVP. The attributes though, I believe, would be useful, so adding the functionlity would not be non-compatible change.

• collateralization - this would add complexity to the issuer administrative/papework, but also could reduce the risk-rate for the investors. Will need further research whether all would be kept off-chain, or if and what could be on-chain.

• call - this will give the option (not obligation) to the issuer to buy the bonds before maturity at a before-set price. This would be issuer-initiated non-rejectable action.

• put - this will give the option (not obligation) to the owner to sell the bonds to the issuer before maturity at a before-set price. This would be owner-initiated non-rejectable action.

[bitsoverflow]

Hello @dtkong

My thoughts on qu. 2/ bond collateralization could be on-chain ecocredits (ID of credit batches) or a voucher representing a 'forward contract' or agreement to purchase future or ex ante credits by a buyer. That would also require a voucher ID as input field if it is a futures contract on ecocredits. Off-chain collateral is how our off-chain bonds currently work, so there are complexities with liquidating that collateral off-chain, therefore no off-chain collateral at the moment. If these features could be included in an Alpha version, but not functional - is that an option? If it were to be included, one streamlined use case is collateral from ecocredits batch ID or associated ecocredits voucher for future delivery.

[tonda100]

MVP will include possibility to issue bond and sell bond. When a bond emission happens a single Bond object is created with face value of entire emission and holder is the issuer of the bond. When a part of that bond is sold to an investor a sell operation will close the current bond object and create two new bond object. Sum of face value of new bonds is equal to a value of closed bond. Investor will be a holder of one newly created bond and a seller will be holder of the other bond.

Bond:

• id (string) - unique ID of bond
• emission_denom (string) - unique id of emission
• name (string) - friendly name of bond emission
• holder (string) - holder account address
• parent_bond (string) - if a bond object was created by selling, this is a pointer to a parent bond id
• face_value (number) - face value of a bond
• face_currency (string) - face value currency of a bond
• issuance_date (datetimez) - when emission happened
• maturity_date (datetimez) - when will be paid the face value to an owner
• creation_date (datetimez) - when a bond object was created (when it was sold to current owner)
• coupon_rate (number) - annual coupon rate of bond in percentage
• coupon_frequency (enum) - how often is coupon rate paid to an owner
• status (enum) - ACTIVE (currently active bond) / CLOSED (bond was sold) / MATURED (bond's face value was paid back)
• project (string) - project code
• metadata (string) - space for some extra data

[robert-zaremba]

I'm doing a review of the proto, and missing some design information, so created #815 to discuss the design in threads.