Defi protocol closes down bond issuance platform after just one month
Regulatory risks and better interest rates from traditional loans led the company to shut down its bond platform
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Porter Finance, an Ethereum-based DeFi protocol, on Tuesday announced that it was shutting down its bond issuance platform. The service made it possible for decentralised autonomous organisations (DAO) to issue bonds to raise funds and pay customers returns in return. Compared to loans, these bonds offered a flexible, long-term lending choice with benefits.
The move comes amid the falling crypto prices as concern about a recession brews among broader equity markets. Porter Finance said, "Looking forward, we are not confident there will be large inflows of lending demand for fixed income DeFi products like the ones offered through Porter Finance.“
This is primarily because institutional fixed income DeFi adoption has been slow over the past year and rates provided in traditional finance remain competitive. According to Jordan Meyer, the founder of Porter, the platform is also looking to avoid legal risks with this move. Meyer added, “We are also no longer willing to take on the legal risk associated with bond offerings. For these reasons, we are pivoting away from the bond issuance platform and exploring better opportunities.”
Meyer also pointed out that Ribbon DAO's obligations to its lenders were unaffected by the recent move. He said, "Ribbon DAO is still bound by its promise to repay." Investors have adopted a risk-averse stance toward borrowing and lending on decentralised protocols in light of the recent downfall of famous DeFi lenders like Celsius. The Portal Finance offering will continue to function until all Ribbon DAO lenders redeem or convert their bonds.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
