Porter Finance closes its bond issuance platform after one month of launch

DeFi protocol based on ETH blockchain, Porter Finance, announced that it is closing down its recently-launched bond issuance platform.
DeFi protocol based on ETH blockchain, Porter Finance, announced that it is closing down its recently-launched bond issuance platform.

DeFi protocol based on Ethereum (ETH) blockchain, Porter Finance, announced that it is closing down its recently-launched bond issuance platform.

According to the announcement, the company is not confident that there will be large inflows of crypto lending demand for fixed-income DeFi projects like the one the company offers. It added:

“This is primarily due to the competitiveness of rates offered in traditional finance and the lack of institutional fixed income Decentralized Finance adoption over the past year. We are also no longer willing to take on the legal risk associated with bond offerings.”

Porter Finance added though these reasons have led to the shutting down of the bond issuance platform, it will continue exploring better opportunities.

Porter Finance recently launched the bond issuance platform

Just last month, Porter Finance announced the first-ever service to issue 3,103,224 convertible bonds redeemable for 1 USDC with a maturity date of December 4, 2022, in collaboration with Ribbon DAO. At the time of issuance, each bond had a discounted price of 0.9667 USDC per bond and had a 7 percent yield to maturity after interest.

Moreover, each bond is backed by 16.112 Ribbon Finance tokens, which cost $4.78 at the time of the announcement in June and are exchangeable for 1.111 RBN. It seems that a sizable amount of over-collateralization was necessary for the bond’s issuance. Additionally, the instrument’s borrowing costs were much higher than those of money-market instruments with the same term.

The shutting down of the bond issuance platform is independent and does not affect the obligations of Ribbon DAO to its lenders. The announcement by Porter Finance reads:

“Ribbon DAO is still bound by its promise to repay.”

The last few weeks have been really tough for the Decentralized sector and lending platforms like Celsius and Three Arrows Capital. On Wednesday, crypto broker Voyager filed for bankruptcy after shutting down withdrawal on the platform last week.