Bomb Money — One Year Completed
A milestone has been reached for Bomb Money with one year completed this week. This is not just a calendar marker but an important milestone because the $BSHARE emissions have stopped. The share token will now have no inflation but does it mean that the $BOMB or $BSHARE token has no utility. The simple answer is no. I will explain more a bit later.
Bomb Chain Around The Corner
The plan remains in place to launch Bomb Chain on 9 January 2023 in partnership with Ankr Protocol. The primary use case for Bomb Chain is a mobile app that will allow provide a simplified experience for users to do single asset staking in their favourite blue chip cryptocurrencies. This is the reason for all the sister protocol on Binance Smart Chain, Avalanche, and Polygon. The aim is for a user experience similar to Celsius but with full on-chain transparency.
The potential bonus on top of this is that developers can launch projects on Bomb Chain. It will not be the initial focus and my view is that this is not a requirement for decent returns but would give it a great boost. Even better, the tokenomics mean that the inflation for $BOMB is controlled by the price action relative to the price of $BTCB. Most blockchain native tokens schedule inflation in advance without any regard for price action.
There is also an opportunity to profit prior to the by locking up your $BOMB for 90 days and receiving up to 2.5 times of your $BOMB back on Bomb Chain.
Price Action
The price of $BOMB has been strong of late. There was already strong momentum before the FTX collapse but $BOMB has had another run up and is now at 30% of the peg level. $BOMB has come off the high which is not surprising given the ending of the $BSHARE emissions. There is still a way to go but with all that $BOMB locked up for Bomb Chain, it is becoming an increasingly scarce asset.
No More BSHARE Emissions — Liquidity Will Be Incentivised Through LP Bonding
With no $BSHARE emissions another way to build up liquidity is needed for $BOMB and $BSHARE. The solution being implemented for now is LP Bonding. This is different to the Bonds that are typically associated with Tomb Forks. LP Bonding is where you swap an LP for a token at a discounted price. The below screenshot gives an example of what is available. You can swap your $BOMB/$BTCB for $BOMB at a 5.72% discount. The offer becomes more attractive if the $BOMB price increases and less if it decreases. There is also a dynamic algorithm that reprices the premium based on supply and demand. You can see that there are Bonds that are charging a premium. This will automatically adjust according to the market because no logical person will pay a premium.
Why Bonding Is Better For A Protocol Than Yield Farming?
Yield farming is also known as rented liquidity because the protocol does not control the liquidity. According to Bond Protocol, 42% of yield farmers exit a farm within 24 hours of launch and 70% are gone after 3 days. Bonding allows the protocol to own the liquidity and build up a more stable and deeper liquidity. There is also a vesting period so that a bond holder can’t just immediately dump the tokens when they get their discount. A commitment is required to take part in bonding.
Protocol Owned Liquidity
The idea of Protocol Owned Liquidity (POL) is a key concept for any DeFi protocol and something that I believe more projects need to focus on. POL provides a stable pool of liquidity for a protocol because it is not in their interest to reduce liquidity. Unfortunately many yield farmers don’t provide a reliable pool of liquidity and generally run for the exits when it is most needed. Another great thing about POL is that it provides an additional revenue stream for the protocol due to the the transaction fees they receive from the DEX (e.g. Uniswap, Pancakeswap).
There are other protocols that are heavily focussed onPOL. DEX Finance are another Tomb Fork that uses Bonding. Optimus use external revenues from their trading bots to build up their liquidity. I also like the approach that EMP Money takes. They have the Detonator which is a higher risk approach for investors but they have also launched NFTs that also reward investors while building a deeper liquidity pool. Bonding is more scalable than constantly issuing NFTs but is also great way to do this.
Why Would You Do Bonding?
The answer here is pretty simple. Do you believe in what the protocol are doing? Are you bullish on $BOMB? If so, why not get a 5% discount for it? There will be a bit of slippage for creating the LP but overall this is still a great deal. For example, you can create $950 worth of LP, bond it then effectively get $1000 worth of $BOMB. Another benefit is that you don’t have to worry about impermanent loss or the fact that you might lose a portion of the token that outperforms.
Final Thoughts
The Bomb Money ecosystem is finding its own direction. They have plenty to offer the degen investor but are thinking beyond the DeFi space and looking at how they can win people to the DeFi space. There is great momentum in $BOMB and while their sister protocols are lagging they could also be considered sleeping giants. I am looking forward to seeing how bonding works out. It’s not a perfect solution by any means but is widely used in the broader DeFi space.
Disclaimer: None of what is written in this article constitutes financial advice. Investing in cryptocurrencies, and in particular decentralised finance, is high risk. What I write is not a recommendation to invest in the projects I discuss. I am not aware of your personal circumstances. Only invest what you can afford to lose. Make sure to do your own research rather than relying solely on my content.
Links
Bomb Money Website: https://www.bomb.money/
Peg Hub Website: https://app.peghub.com/
Weekly Updates: https://www.peghub.com/blog/category/bomb-shell-monday/
Telegram: https://t.me/bombmoneybsc
An Important Note
Defi is the wild west and there are scammers out there trying to take your crypto all the time. If you don’t have a hardware wallet then this puts your crypto at an increased risk as desktop wallets are more exposed to hacks. Centralised exchanges don’t provide an adequate solution either. There have been cases where they have been hacked or mismanaged the crypto their customers have handed over. The best way you can protect yourself is by getting a hardware wallet and storing your crypto there. They may be a bit clunky to use but protecting your crypto is more important.
I personally prefer Trezor but the Ledger is more versatile and can be used for more cryptocurrencies. If you don’t have a hardware wallet you can get a Ledger by using my affiliate link here.
Ledger Link: https://shop.ledger.com/?r=d7b7094a37a9
Trezor Link (no affiliate commission): https://trezor.io/compare