Today we are launching the issuance of Iron Bank bonds in partnership with Olympus Pro. The goal is to build out Iron Bank owned liquidity as a part of our tokenomics strategy. Token liquidity is a challenge across the industry for protocols; this will benefit the community by strengthening IB token liquidity.
As with any protocol, there are four main tokenomics problems for Iron Bank.
- Sell pressure due to reward issuance. Especially LP providers who immediately sell rewards to recoup their investment.
- Goal misalignment between Iron Bank and LP providers. As we’ve learned from the DeFi wars, LP providers have mixed objectives between long term and mercenary goals. Decisions made by LPs may not align with the best interest of Iron Bank, but favor the short term reward rate.
- Impermanent Loss. Unfortunately success for Iron Bank can often be a disincentive for LP providers to participate long term as the risk of greater impermanent loss increases.
- Liquidity Safety. Protocol liquidity is needed most during periods of volatility. Unfortunately this is often also when LP providers will pull their liquidity.
By owning our own liquidity through the issuance of Olympus Pro bonds, we address the above 4 problems directly because we are working for the long term success of Iron Bank. This strengthens and supports the community by adding confidence in the strength of our tokenomics. More importantly, this allows Iron Bank to remove short term liquidity distractions to instead focus on our mission: To be the liquidity backbone for DeFi by growing protocol-to-protocol lending.
For users to participate, please go to https://pro.olympusdao.finance/#/bond/ib_ftm_bond or follow the Bond link on the frontend at app.ib.xyz.