Porter Finance, a decentralized finance protocol, or DeFi, based on the Ethereum (ETH) blockchain, announced this Tuesday, July 6, that it was closing its bond issuance platform. Explaining the discussion, Porter Finance said:
“Going forward, we do not expect large loan demand flows for fixed income DeFi products such as those offered through Porter Finance. This is mainly due to the competitiveness of rates offered in traditional finance and the lack of adoption of institutional fixed income DeFi in the last year In addition, we are no longer willing to take the legal risk associated with bond offerings.”
Porter Finance is shutting down its bond issuance platform.
Please see the medium article below:https://t.co/4dPNEvqXrr
— Porter Finance (@porterfinance_) July 4, 2022
Last month, Porter Finance introduced a first-of-its-kind service in partnership with Ribbon DAO to issue 3,103,224 convertible bonds redeemable for 1 USDC with a maturity date of December 4, 2022. At that time, each bond was issued at a discounted price of 0.9667 USDC per bond with a yield to maturity of 7% after accounting for interest.
Additionally, each bond is collateralized by 16,112 Ribbon Finance tokens ($4.78 at the time of the June announcement) and is convertible for 1,111 RBN. It appears that significant excess collateral was required for the bond issue. The instrument also had a significantly higher cost of borrowing than money market securities of the same maturity.
In light of the recent implosion of notable DeFi lenders such as Celsius, investors have taken a risk-averse approach to borrowing on decentralized protocols. The total value locked in such projects, tracked by DeFi Llama, has plummeted nearly 70% since the start of the year. The Portal Finance offering, characterized by its underlying smart contract, will remain active until all Ribbon DAO lenders cash in or convert their bonds.
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