Bond Issuing

Acceptable Collateral Assets

Hipo enables users to deposit one set of collateral assets, while borrow another set of assets. Bonds issuer could borrow corresponding stable coins or Algo by depositing LPs Tokens from Uniswap V2 and issuing bonds.

Valuation of Collateral Assets

Hipo V1 accepts LPs Tokens of USDC/ETH, ETH/USDt, DAI/ETH on Uniswap. Each token represents the LP’s share of the pool’s assets along with the trading fee percentage, thus the value fluctuated with impermanent loss and accumulated fee.

LP TokenQuant of A (x)Quant of B (y)

1

USDC/ETH

USDC

ETH

2

ETH/USDt

USDt

ETH

3

DAI/ETH

DAI

ETH

Issuing Bond

Bonds issued through Hipo are zero coupon bonds. A zero coupon bond is security that does not pay interest but instead trades at discount, rendering a profit at maturity, when the bond is redeemed for its full face value.

Determine Maximum Amount of Bonds To Be Issued

The maximum value of zero coupon bond, or in the other words, maximum borrowing amount, is function of underlying value of collateral assets. The margin reserved protects the protocol from default risk. The maximum number of bonds to be issued is calculated by following formula:

or

where,

The cryptocurrency of bonds is same as that of LP Token. For example, if the LP Token is USDC/ETH, the issuer may choose to issue either USDC bonds or ETH bonds. The total number of USDC and ETH bonds shouldn't exceed the maximum LTV ratio.

#LP TokenBondsMax Appendix

1

USDC/ETH

USDC Bonds

0.8

2

USDC/ETH

ETH Bonds

0.8

3

ETH/USDt

USDt Bonds

0.8

4

ETH/USDt

ETH Bonds

0.8

5

DAI/ETH

DAI Bonds

0.8

6

DAI/ETH

ETH Bonds

0.8

Pay Bond Issuing Fee

The bond issue fee is 0.2% of the total bonds issued, which is calculated at face value of the bonds. The issue fee is paid in the same cryptocurrency as the bonds. For example, the bond issuance fee is paid in ETH for ETH bond

Set Bond Time Periods

The bond expiration date is the date in the future, on which the bond issuer returns the notional value to its purchaser. The time period is calculated from the day bond issued to expiration date, it is set when the bond is issued. Hipo V1 supports a set of time periods, including 5 days, 10 days, 15 days, 30 days, 45days and 60 days.

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