Where is the yield coming from?
The interest earned on SW DAO bonds comes from the 6% of our tokenomics initially dedicated to Liquidity Mining. These 60,000 SWD tokens are being refashioned for their original purpose, just with a new name.
All of the tokens included in this program have already been set aside, and when current stakers claim all future tokens, the bond pool cannot be entered by new participants. The maximum yield earned from these bonds is 40%, as set by SWIP-07. However, the actual yield will depend on market demand.
Who are SW Bonds right for?
If you are looking for a dependable way to earn a yield on your capital outlay, then SW DAO bonds are perfect. With guaranteed capital outlay and a fixed yield, these bonds offer a great way to earn SWD tokens without purchasing them directly on the open market.
With a preallocated SWD token outlay, we are only issuing bonds that can be satisfied, meaning that the yield you see on deposit day is guaranteed over the term. This makes SW DAO bonds an excellent choice for investors looking for a safe and reliable way to earn a return on their investment.
Why are we issuing bonds?
Bond issuance offers a reliable way for SW DAO to deepen liquidity depth on DEXs. The idea behind bond issuance is that participants are incentivized to provide liquidity for a more extended period, with less market selling expected to occur as soon as the liquidity mining program ends. This model also enables SW DAO to increase product TVL simultaneously.
The bond issuance model was inspired by OHMs liquidity buyback model, which we initially sought to adopt instead of the traditional liquidity mining model. Bond issuance provides a more sustainable and effective way to incentivize liquidity providers. We hope this will create deeper liquidity pools on DEXs, leading to increased product TVL and a more efficient market overall.