The $180 million market cap RBN token is trading at $0.2343, down 1.9% against USD in the past 24 hours while up 6.3% against BTC and 4.8% against ETH. During this time frame, the crypto asset has been recording $500,570 in trading volume, representing an increase of 18.70% from a day ago.
RBN is currently in the green by 5% in the past week and by 21.5% in the past month though down 32% in the past year.
The Ethereum token that governs the decentralized finance (DeFi) protocol Ribbon Finance has been enjoying a gradual uptrend for the past three months. During the period, RBN has rallied about 80%, and it is also up by 26% in 2023 so far.
RBN was actually launched during the bull market of 2021, and right at its release, it hit an all-time high (ATH) of $5.54. Since then, the token has been on a downtrend, in line with the broad crypto market, currently down 95.77% from its peak.
The token has a total supply of 1 billion, out of which 768.4 million are currently circulating in the market, as per CoinGecko.
RBN is Ribbon Finance’s native cryptocurrency, which was initially a governance token used to oversee its development and vote on the platform’s future. Over time, it has been made integral to the Ribbon ecosystem by using it for grants and liquidity mining programs.
When it comes to Ribbon’s staking model, RBN holders stake their tokens in exchange for Staked Ribbons (sRBN). These sRBN tokens can then be used for on-chain governance to execute proposals autonomously instead of a loose consensus.
The protocol utilizes a model that gives the longest-term RBN stakeholders more power and prizes to align incentives. This is achieved by ensuring that the more long-term users stake their RBN tokens, the more voting power they receive. Long-term users also receive higher future RBN rewards and a more significant share of the Ribbon protocol revenue.
Click here to learn all about investing in Ribbon Finance (RBN).
Ribbon Finance Prepares for its Rebranding
Ribbon Finance was officially launched on February 15, 2021, by co-founder Julian Koh, who has previously worked with crypto exchange Coinbase as a software engineer. The project is designed to generate yield by combining futures, options, and fixed income to improve a portfolio’s risk-return profile. The blockchain protocol basically provides users with sophisticated DeFi products.
The primary objective of Ribbon Finance is to introduce structured products, which are pre-packaged investments that often incorporate interest-bearing assets and derivatives, into the DeFi space.
The platform’s first product, Theta Vault, focused on yield through two automated options strategies on ETH and WBTC, namely, covered call and put selling. The Ribbon team then introduced its improved version that enhanced the existing vault’s efficiency, removed withdrawal fees, and decentralized the operations.
Earlier this week, Ribbon Finance announced that with the approval of its latest Governance proposal RGP-33 late last month by the community, Ribbon will be folded into the affiliated Aevo derivatives exchange, which launched its mainnet in June. In the coming weeks, the team will start discussing the new Governance system.
Ribbon currently runs several DeFi options vaults (DOVs) on Ethereum but has struggled to scale, prompting the team to pivot to Aevo, a non-custodial options and perpetual futures exchange built using the Optimism stack.
To shed the ‘heavy baggage’ associated with Ribbon, as described by the community manager, the project is undergoing a rebranding. This move is aimed at eliminating the ‘limitation’ that the name Ribbon represents. This decision follows issues that emerged after the launch of the RBN token by Ribbon, when Divergence Ventures, a DeFi venture fund that invested in Ribbon, was found to have conducted a Sybil attack on the token’s airdrop.
And before the end of this month, the team plans to complete the rebranding of all private and public Ribbon Finance communication channels to Aevo and wind down the entire Tokenomics system (Ribbonomics) linked to RBN, under which all staking rewards and revenues will be brought to zero. Following this, users will be able to unlock veRBN without penalty. Once the merge is completed, users will be able to swap their RBN tokens into AEVO at 1:1 with no deadline or limitations to make the swap.
This rebranding to Aevo comes as the derivatives L2 went live on the mainnet for traders to use.
Aevo was launched last year and began offering options tied to altcoins in mid-May. The platform allows users to pick the strike price and tenure of options and get instant quotes from GSR, Galaxy, and OrBit Markets.
The Deribit-dominated options market has been so far restricted to majors; Bitcoin and Ether. But with Aevo, users can also bet on other altcoins’ price action. However, they can only buy options and hold the same till expiry or square off before the expiry. The decentralized options platform plans to allow users to write options with customized margins and a particular counterparty in the future.
A few weeks ago, London-based financial services provider Marex and digital assets manager MEV Capital executed an “autocallable” tied to ETH through a smart contract built by Ribbon Finance.
Talking about the on-chain deployment of such exotic options, Laurent Bourquin, Managing Partner at MEV Capital, said in an interview that this would allow them to enhance several of their market-neutral strategies while staying on the main chain Ethereum. This move not only allows instant settlement and a seamless lifecycle but also makes these products more transparent for investors. Additionally, the counterparty risk is eliminated by locking the maximum payout and collateral in a secured and audited smart contract.
Harry Benchimol, Co-Head of Derivatives Engine at Marex Solutions, noted that given the importance of yield farming in DeFi, Autocallable provides “a new way to extract yield while having some downside protection.”
A New All-weather Product
In the world of on-chain options, where volume has been low, Ribbon Finance aims to make it easy for anyone to become an option seller through its vaults, earning yield for selling out-of-the-money options.
Ribbon’s “Decentralized Option Vaults” (DOVs) haven’t been risk-free, but with market conditions changing significantly these past few months, the team has noticed an “overwhelming demand” for safer, principal-protected products. As a result, Ribbon has launched its first structured product called Ribbon Earn, which revolves around principal protection. It generates yield through lending, then enhances that through purchasing options to get exposure to short-term volatility in the market.
Instead of trading a choppy market, Ribbon Earn lets its users get exposure to weekly moves in both directions up to a certain level. And if the price level doesn’t move or exceeds the range in either direction, users get back a rebate of 4% APY, as well as their principal back.
The product is for a period of 28 days, with an upside barrier of 108% and a downside barrier of 92%. The depositing currency is USDC, and the underlying Asset is ETH. The team is planning on introducing other products, such as Ribbon Earn ETH and Ribbon Earn BTC as well.
The same day, the Ribbon Finance team announced the re-launch of its first principal-protected product Ribbon Earn USDC, in partnership with Backed Finance, which tokenizes stocks to make capital markets.
Ribbon Earn USDC V2 is defined by the team as an all-weather product that generates yield by purchasing the Treasury Bond tokens, which are 100% backed by Blackrock with maturity between zero and one year and have an average yield of 4.64%. This is enhanced by purchasing ETH exotic options to get exposure to short-term volatility in the market. This way, depositors can get upside exposure to the crypto market while remaining principal protected.
In its official announcement, the team noted that market-makers have been deleveraging across the board post-FTX collapse while US treasury bill rates were rapidly rising. This has led to the proliferation of companies like Backed Finance which have tokenized US treasuries on-chain.
To take advantage of this, the vault has been made live on the Ethereum mainnet. The Ribbon team has capped the total value locked (TVL) at 7.5M USDC for the first epoch, and the strategy will be deployed this week on Friday, April 21.
At the same time, in its V2 Upgrade, two key changes have been brought to the protocol: risk-free rates and an ETH 10-delta knock-out barrier. For risk-free rates, instead of sourcing funding by lending USDC open-term to market makers, V2 sources funding by purchasing Backed IB01 tokens which represent ownership of the bond ETF. In V2, the barriers will be fixed at the 10-delta levels instead of being fixed for the exotic option to move dynamically with volatility.
As for the safety of the funds and ensuring that the bIB01 tokens are indeed backed 1:1 by securities in the custodian bank, Ribbon Finance noted that assets are ring-fenced from Backed Finance’s balance sheet, which limits financial risk and further protects the entity’s obligations towards the token holders. Also, the company is integrating with Chainlink to enable seamless and decentralized proof of reserves attestations by verifying collateral amounts and posting them on-chain.
In the coming month, the protocol further plans to diversify counterparty risk by allocating into a weighted basket of tokenized T-BILL providers such as Ondo Finance, MatrixDock, OpenEden, and Stream Finance.
Click here to learn all about buying Ribbon Finance (RBN).
A Look at the Broad Crypto Market
While RBN is enjoying an uptrend, the same can’t be said of the crypto market, which is experiencing turmoil that saw Bitcoin falling to nearly $26,000 and Ether to $1,560. As of writing, BTC is trading at $26,367 while Ether is exchanging hands at $1,680.
According to CryptoQuant, demand for Bitcoin in the US has decreased based on the fact that the Coinbase premium has been negative. The Coinbase Premium Index measures the gap between BTC prices on Coinbase and Binance, and a positive reading indicates strong buying pressure on the spot market. In contrast, a decrease means institutional demand has been low, and selling pressure has been dominating.
With majors down so much, altcoins took an even deeper fall. XRP led the losers after Judge Analisa Torres granted the SEC approval to appeal the recent favorable ruling for Ripple Labs regarding retail sales of token XRP.
The losses of XRP, LTC, BCH, SUI, and APE in the past 24 hours have been in double digits, which sent the total crypto market cap down by 6.2% to $1.1 trillion.
The latest move sent the Options’ Implied Volatility (OIV) from 24% to 55%, as per Glassnode. Amidst this, the “buy the dip” phrase has been popular in search and discussions, showing Santiment’s social tool.
This sudden dip in prices has also resulted in massive liquidations across various exchanges. According to Coinglass, more than $1 billion have been liquidated in the past 24 hours, with Bitcoin accounting for almost half of it. During this period, 177,083 traders were liquidated, with the largest single liquidation happening on Binance for ETHBUSD, valuing $55.92 million.
Among the exchanges, OKX saw the highest percentage of long liquidations at 98.2%, with Binance also having a significant long liquidation rate of 91.97%, while Deribit had a dominant short liquidation rate of 56.32%.
Crypto, however, wasn’t alone in experiencing the red sea as global shares hit two-month lows on Friday as investors bet on interest rates staying elevated for longer after the release of minutes from the Federal Reserve’s July meeting fueled concerns of more monetary tightening ahead. The US government bond yields continue to remain near recent 16-year highs.
Additionally, there are increased worries over China’s shadow banking sector as the country’s real estate powerhouse Evergrande filed for Chapter 15 bankruptcy in a US court. There’s also a potential CNY devaluation, which is trading at its weakest level in about 15 years.
Concluding Thought
As we saw, Ribbon Finance is busy building its product with big things in the pipeline. By focusing on building in the currently down-trending market characterized by a lack of volume and users, Ribbon Finance can position itself for the bull market in the future.
But for now, Bitcoin’s weakness doesn’t bode well for altcoins, including RBN, which, while holding onto some of its gains, can soon capitulate and join the rest of the crypto market.
The post Ribbon Finance (RBN) Holds Strong as Crypto Market Tanks appeared first on Securities.io.
