In November, we announced our Ribbon Treasury product. Since then, we have offered custom covered call and put selling vaults to protocols looking to earn yield on their native token, ETH, BTC, and stablecoins. However, options selling is one of several treasury management strategies. Our goal is for Ribbon Treasury to be the one-stop shop for treasury strategies for all protocols, which at time of writing is a $9.5B market.
To that end, we are excited to announce that we are expanding our suite of treasury products. We are partnering with Porter Finance to offer fixed rate, non-liquidatable, flexible collateral type bonds to protocols! After undergoing underwriting, protocols can mint bonds and auction them off to whitelisted lenders to raise cash immediately. Protocols will now be able to earn high yields on treasury funds and issue bonds all from Ribbon Treasury.
In traditional finance, there are $10 trillion worth of corporate bonds outstanding (as of 4Q21) in the United States alone. There is a strong demand for companies to borrow cash now and pay it back in the future either through bond issuance or flat out loans. As protocol treasuries mature, they will be no different.
Eventually, we will offer an evolved bond issuance strategy that cannot be found in traditional finance. Further down the road we may allow a protocol to issue a collateralized bond against their native token and use the same collateral to sell covered calls to repay the debt. This does not come without risks, but this frictionless composability is not even possible in traditional markets.
Assuming we capture 5% of the total DAO treasury value as collateral within a year, we will have $475M collateral from bond issuance alone which at the discretion of the bond-issuing DAO’s we can redirect to earn yield elsewhere — through options selling or otherwise.