DeFi bonds enter the market as Mainframe acquires Sablier

DeFi is drawing in more than just new users, enticing developers to pivot their projects towards crypto’s hottest new trend.

DeFi lending protocol Mainframe announced today the acquisition of Sablier, a real-time finance protocol designed to send continuous payments via the Ethereum blockchain, dubbed “money streaming.” The Mainframe team will use Sablier tech to develop a novel DeFi product in the form of low-collateral bonds. The announcement shows how quickly the DeFi market is developing, and how consolidation can drive innovation in the highly fragmented crypto market.

Mainframe began life as a decentralized communication platform, raising more than $20 million in a February 2018 initial coin offering (ICO). A June 2018 blog post captures the excitement and FOMO prevalent during that era. Few could have predicted that the next two years would see a slow decline among Bitcoin, Ethereum, and other cryptos, many falling more than 80% off all-time highs. In February 2020, Mainframe announced its pivot to DeFi.

"When you look around the blockchain space today, DeFi represents the majority of utility. By creating open financial building blocks, Mainframe is positioned at the foundation of tomorrow’s financial products,” Mainframe CEO Doug Leonard told Decrypt.

“We hope to strengthen the bridge between real-world use of crypto by providing more practical and predictable lending and borrowing solutions. We want to use our crypto in more ways, which is why Mainframe repositioned its offering into DeFi."

Sablier launched its decentralized app for continuous payments in June 2019, then in August 2019 received a grant from DeFi lending protocol Maker. In December 2019, Sablier released a major upgrade to their application including mobile access, updated web interfaces, and other improvements.

“Mainframe has a collaborative vision that joins the best aspects of several DeFi technologies,” Sablier founder Paul Razvan Berg said in an earlier statement. “I’m excited to join the Mainframe team, add Sablier resources to the project and build those lending and borrowing instruments that are in high demand.”

Mainframe plans to introduce the Mainframe Lending Protocol, a DeFi bond system allowing users to take fixed-rate loans with less collateral than is currently required by other DeFi protocols. Users can also act as Guarantors for the protocol, providing backup collateral for bonds and gaining access to discounted assets if bond issuers default.

DeFi has released a dizzying array of financial products, but bonds have thus far been mostly overlooked. Bonds like those Mainframe plan to facilitate accrue no interest but are typically sold at a discount, allowing the buyer to make a profit when the time comes to redeem the bond.