Protocol Overview
Search…
⌃K
Links
👋

Welcome to Bonq

Bonq brings Self-Sovereign Liquidity to on-chain assets

Summary

Bonq is a non-custodial, decentralized and over-collateralized lending platform that solves four critical problems for projects and protocols that have a token:
  • Allows them to borrow against their own tokens at zero interest rate
  • Creates deep liquidity solution without the need to incentivize or pay the other side of the liquidity pool
  • Offers sustainable yields to their community members holding tokens in a safe and secure environment
  • Allows Treasuries to de-risk and create a smart capital allocation
Bonq Self-Sovereign Liquidity - Cost and capital efficient solution to protocol-owned liquidity
Who should use Bonq?
  • Blockchain protocols and projects in need of deep liquidity for their DEX pools that want to tap into the debt market
  • Token holders who want to earn yield and access liquidity by borrowing against their own tokens
  • Treasuries who want to diversify their concentrated portfolios without selling tokens

Protocol Overview

Users can access the liquidity of their own digital assets by locking them up in a trove, which is a smart contract controlled only by the users, and mint a low volatility payment coin BEUR, pegged to the Euro.

The BEUR tokens have the following properties:

  • Tradable and exchangeable - Anyone can buy or sell them, whether they have an open Trove or not
  • Fully redeemable - Users can always swap 1 BEUR for 1 EUR worth of collateral (minus fees) directly on the Bonq platform. This will create a floor for BEUR price
  • Mintable - Users mint BEUR in their trove smart contracts
  • Burnable - BEUR tokens are burned when used to repay a Trove’s debt

Fees

Bonq is an interest-free protocol that has two one-time fees that help with the price stabilization mechanism of BEUR. Those fees directly impact the supply and demand of BEUR and protect the platform from front running. One fee is issued when BEUR is borrowed and another one when BEUR is redeemed.
Borrowers pay an issuance fee on each loan opened. The fee is paid in BEUR, added to the loan right from the beginning and is calculated between 0.5% and 5% by the smart contract, depending on the current market demand for BEUR. Most of the time the issuance fee is expected to be 0.5%
Redeemers are charged a redemption fee paid when exchanging BEUR for trove collateral. The fee is paid in BEUR and depends on the trove collateral ratio. Troves with high collateral ratios require higher redemption fees than troves with low collateral ratios. The fees cannot become smaller than 0.5% to protect the redemption facility from being misused by arbitrageurs front-running the price feed
Repaying the debt is free of charge

Revenue

There are three different ways to generate revenue using Bonq:
  • Deposit BEUR to the Stability Pool and earn liquidation gains (in collateral assets or BEUR) and BNQ rewards
  • Become a Liquidity Provider of BEUR in liquidity pools on decentralized exchanges and earn swap fees
  • Stake BNQ and earn BEUR cashback generated from borrowing and redemption fees.

Liquidation

The Bonq system regularly updates the collateral asset prices via a decentralized data feed. When a Trove falls below the minimum collateralization ratio, it is considered under-collateralized and is getting automatically liquidated.

Risks

There are two scenarios under which users may lose part of their funds:
  • Trove liquidation - if a trove gets liquidated, the borrower can still keep their borrowed BEUR, but the Trove will be closed and the collateral will be used to compensate Stability Pool depositors.
  • Stability Pool depositors may have their BEUR used to repay debt from liquidated borrowers. Since liquidations are triggered any time trove collateral drops below the minimum collateral ratio (MCR), Stability Pool participants will receive up to 20% additional digital assets to compensate for the BEUR burned. However, in very volatile markets if the digital assets continue to drop in price before selling them, the Stability Pool depositors may lose value in their total pool deposits.

Governance

Bonq protocol is governed by the Bonq DAO. The members of the DAO include the initial founding members and the projects/entities that have their native tokens whitelisted. Governance decisions are made by the DAO directors, the DAO members and BNQ token holders who stake BNQ.