How Bonds Work

Bonds use a similar format to Plasma’s OTC deal: the Maker creates a deal, offering one kind of token (the bond token) in exchange for another (the purchase denom), at a pre-set rate of exchange. The Maker sets the parameters of the deal. This is facilitated on-chain.

When a Taker participates in the deal, they receive bTOKENs. These represent guaranteed future access to the tokens in the Bond deal when it reaches Maturity. bTOKENs are redeemed 1:1 for the tokens in the Bond deal, and are tradable and transferable, just like any other token. When a bond matures, bTOKENs are redeemed for the tokens locked in the bond.