Were you thinking of any bond NFT in particular? In general, I would say that yes, they are probably different and that NFTs are not the best method to represent a bond.
An NFT represents a unique asset and is assigned unique identification codes and metadata that distinguish them from other tokens. So, you would want them to represent assets that are not interchangeable, like say a piece of art or a real state item.
Bonds, however, are fungible securities - Treasury Bill A equals Treasury Bill B equals Treasury Bill X. Representing interchangeable bonds as non-fungible tokens would not be ideal. Instead, a standard like ERC-20 that treats all tokens uniformly makes more sense for bond tokenization.
A project that is bringing real-state yields on-chain via NFTs and might interest you is:
From what I can see, they are a lending protocol and use NFT bonds as proof of a loan being taken. Since their lending is peer-to-peer, it makes sense to use an NFT because all loans will be unique.
If, however, we are talking about a protocol or government issuing bonds, it's likely they will offer a large amount of bonds with the same characteristics. In that case an NFT doesn't make that much sense, and you'd be better off using an ERC-20 or similar standard that maintains fungibility.
To follow up (after doing some more reading), I think Cardano would be able to do what is needed for government bonds. One can mint fungible tokens that are native assets (so no smart contract required as on ERC-20). In the mint one can determine a quantity to be minted (hence, fungible, right?) I thought this page had good detail: https://docs.cardano.org/native-tokens/faqs/
Again, I appreciate you willingness to answer questions.
No problem at all, this is an interesting conversation.
So, Cardano would definitely be able to handle US or any other kind of bond and from what I can gather native tokens seem a better solution than ERC20s.
As you said, no smart contract is necessary, so logic like balances and transfers are direclty built into the ledger, there's no extra fees for minting, transfer, etc. Plus, they are likely more secure than ERC20s since devs do not need to deploy contracts to create them.
However, I'd argue that the chain most bonds will settle on will be either:
a) The most reputable and secure chain with the highest amount of TVL, and the one with more battle-tested Defi and tech (Ethereum)
b) A chain with "superior" tech, that can handle high throughput at low costs and with low time to finality (Solana, maybe one of the up and comers like Sui).
Cardano has improved greatly in the last few months but it still needs some catching up to do against the leading chains in these two areas.
Is this different from an NFT Bond, Kodi?
Were you thinking of any bond NFT in particular? In general, I would say that yes, they are probably different and that NFTs are not the best method to represent a bond.
An NFT represents a unique asset and is assigned unique identification codes and metadata that distinguish them from other tokens. So, you would want them to represent assets that are not interchangeable, like say a piece of art or a real state item.
Bonds, however, are fungible securities - Treasury Bill A equals Treasury Bill B equals Treasury Bill X. Representing interchangeable bonds as non-fungible tokens would not be ideal. Instead, a standard like ERC-20 that treats all tokens uniformly makes more sense for bond tokenization.
A project that is bringing real-state yields on-chain via NFTs and might interest you is:
https://www.tangible.store/
I was thinking specifically about aada.finance
From what I can see, they are a lending protocol and use NFT bonds as proof of a loan being taken. Since their lending is peer-to-peer, it makes sense to use an NFT because all loans will be unique.
If, however, we are talking about a protocol or government issuing bonds, it's likely they will offer a large amount of bonds with the same characteristics. In that case an NFT doesn't make that much sense, and you'd be better off using an ERC-20 or similar standard that maintains fungibility.
Thanks, Kodi. Good explanation.
To follow up (after doing some more reading), I think Cardano would be able to do what is needed for government bonds. One can mint fungible tokens that are native assets (so no smart contract required as on ERC-20). In the mint one can determine a quantity to be minted (hence, fungible, right?) I thought this page had good detail: https://docs.cardano.org/native-tokens/faqs/
Again, I appreciate you willingness to answer questions.
No problem at all, this is an interesting conversation.
So, Cardano would definitely be able to handle US or any other kind of bond and from what I can gather native tokens seem a better solution than ERC20s.
As you said, no smart contract is necessary, so logic like balances and transfers are direclty built into the ledger, there's no extra fees for minting, transfer, etc. Plus, they are likely more secure than ERC20s since devs do not need to deploy contracts to create them.
However, I'd argue that the chain most bonds will settle on will be either:
a) The most reputable and secure chain with the highest amount of TVL, and the one with more battle-tested Defi and tech (Ethereum)
b) A chain with "superior" tech, that can handle high throughput at low costs and with low time to finality (Solana, maybe one of the up and comers like Sui).
Cardano has improved greatly in the last few months but it still needs some catching up to do against the leading chains in these two areas.
Anytime Clark!
BIG first nibble. They're coming in carefully