Macauley Peterson

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 <ul>
 <li>Ribbon DAO will issue $3 million of convertible bonds redeemable until December 4, 2022</li>
 <li>The bonds carry a maximum yield to maturity of 7%</li>
 </ul>
 
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Two months after raising <a href="https://cms.blockworks.co/porter-finance-has-a-new-idea-to-help-daos-grow-defi-bonds/" target="_blank" rel="noreferrer noopener">its seed round</a>, DeFi upstart Porter Finance is bringing its first big idea to market.&nbsp;



The platform began offering convertible bonds for a DAO, on Monday, with Ribbon Finance’s DAO (decentralized autonomous organization) as its launch partner.



The convertible bonds — effectively zero-coupon bonds sold to investors seeking a fixed income — are secured by 50,000,000 RBN (Ribbon Finance&#8217;s native token) or about 16.1 RBN per bond, according to <a href="https://app.porter.finance/pdf/Ribbon%20DAO%20Prospectus.pdf" target="_blank" rel="noreferrer noopener">a prospectus</a>. That equates to about $15.2 million collateralized at 490%.



“This is a huge step forward for DAOs,” Jordan Meyer, Porter Finance founder, said in a statement, who called it “a completely new fundraising option for DAOs and a novel lending opportunity for investors.”



Ribbon DAO has around $170 million in assets under management via Ribbon Finance’s decentralized options vaults (DOV).



The Ribbon Finance protocol, operated via fully on-chain governance by Ribbon DAO, has generated about $4 million in revenues since October 2021, according to a statement.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Excited to be the first DAO/protocol to issue debt on-chain. This is a great way for protocols who have strong cash flows to raise money in a bear market without selling tokens 🎀 <a href="https://t.co/BlHIJ1IqF6">https://t.co/BlHIJ1IqF6</a>&mdash; Ribbon Finance (@ribbonfinance) <a href="https://twitter.com/ribbonfinance/status/1532573202659954688?ref_src=twsrc%5Etfw">June 3, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Having consistent revenues, a large treasury, and strong execution history, Ribbon is the perfect example of a creditworthy DAO,” Meyer told Blockworks.



The prospectus notes Ribbon intends to use the net proceeds from sales of the bonds “for general purposes, including protocol-owned liquidity and bootstrapping the stablecoin supply in our covered call Fuse pool,” referring to a feature from Rari Capital that lets users borrow stablecoins against their Ribbon vault positions.



&#8220;This lets us collateralize our treasury RBN to raise cash today at a predictable rate,&#8221; a representative from Ribbon DAO told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;We are willing to give lenders some equity upside in exchange for better interest rates.&#8221;</blockquote>



Meyer expects this initial bond offering will catalyze a flood of similar deals.



“We are working to help more DAOs raise using the product and adding new features based on their feedback,” Meyer said. “We now have a large inbound of DAOs looking to follow in Ribbon’s footsteps.”



This story was updated on June 6, 2022, at 7:00 pm E.T. with comments from Ribbon DAO.



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