$BOLD - DeFi's Treasury Asset

Why are US Treasury Bills (T-Bills) the backbone of global finance? Because they provide a risk free rate on the world’s reserve currency, thanks in no small part to their backing by the US federal government.

In DeFi, we lack a truly on-chain asset that mirrors such properties. While tokenized treasuries offer access directional exposure to this yield, they introduce multiple levels of counterparty risk and tether users to the traditional systems for which they seek an alternative.

Even worse are stablecoins like USDC, which are backed by treasuries but do not pass on any of the yield to holders, leaving them with uncompensated counterparty risk. Moreover, DeFi money markets have volatile floating rates that are difficult to predict, making long-term planning difficult.

This highlights a gap in DeFi - we lack a base asset that offers stability and security on the order of Ethereum itself, one that is also capable of rewarding holders. The ideal solution would provide as little counterparty risk as possible, sustainable yield, and full custody over your funds. This was the goal when designing the Earn product in Liquity V2: pristine collateral for DeFi.

With BOLD deposited into Liquity V2’s Stability Pools, users earn direct yield from 75% of protocol revenue with no intermediaries. Borrowers pay market-driven interest rates, while depositors receive predictable yields with an extremely tight spread between borrowing costs and deposit yields.

This tight spread maximizes yield for depositors without relying on governance, middlemen, or external market dependencies, setting the Earn product apart from existing money markets or CDPs.

Let’s explore why saving in BOLD stands out, and why there are few true alternatives in DeFi today.

The BOLD Standard
“The BOLD Standard” reflects three key principles at the heart of Liquity V2:

• Backed: BOLD is always redeemable, making it as liquid as the protocol’s underlying collateral (ETH)
• User-owned: 100% of the revenue goes directly to BOLD holders and the ecosystem, with no need for trusted third parties
• Market-driven: Borrowers set their own interest rates, while lenders receive direct revenue flows autonomously

Unlike with other DeFi incumbents, the only things you rely on with BOLD are its smart contracts and oracles. This makes BOLD the only crypto dollar you truly own.
Compared to other stablecoins in DeFi, BOLD has a very unique risk-minimized profile. While LUSD and RAI offer similar qualities, BOLD goes a step further by adding in productive native  yield. Let’s dive in.

Earn productive yield with BOLD in the Stability Pool
Unlike traditional lending markets and CDPs where yields fluctuate based on utilization factors, or can be changed by governance, Liquity V2 directs 100% of its revenue towards growing the stablecoin. 75% of it goes to the Stability Pools, while 25% is funneled into Protocol Incentivized Liquidity (PIL). Apart from receiving an ongoing yield in BOLD, SP depositors also get (staked) ETH-denominated proceeds after liquidations events.

This creates a self-sustaining yield environment, where borrowers pay market-driven rates, and depositors receive sustainable, stable yields. The narrow spread ensures that depositors get a higher yield compared to traditional lending markets, which are often burdened by large gaps between rates.

As liquid as ETH
‍BOLD’s advantage over traditional CDP-based stablecoins lies in its superior liquidity and redemption mechanism. With other decentralized stablecoins, liquidity providers often face the risk of being left holding stablecoins that lose value during market downturns, leaving them stuck with tokens that may not return to their peg for an extended period.

In contrast, BOLD’s redemption mechanism eliminates this issue by ensuring that holders can always tap into ETH liquidity, as the stablecoin remains as liquid as the underlying ETH backing it. This makes BOLD not just a dependable source of sustainable yield for liquidity providers, but also a highly liquid asset, providing a secure and seamless exit free from any risks

A foundation for new DeFi products
Because Liquity V2’s rates are market-driven and operate with very tight spreads, it provides ideal reference rates for other DeFi products to build on top of.
Moreover, BOLD’s decentralized risk profile, redemption mechanics, and real yield capabilities make it a prime asset for treasuries looking to diversify to a truly crypto-native dollar.

By establishing BOLD as both a yield bearing stablecoin, and a reference rate for DeFi to follow, V2 delivers a stable, market driven protocol that benefits borrowers and lenders. Just as US T-Bills serve as the foundation of traditional finance, BOLD can become the essential building block, and standard across DeFi.
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