On Wednesday, the Telos blockchain announced the launch of a new tool designed to raise funds for low-liquidity projects: an NFT product known as a “T-Bond”.
In an interview with Cointelegraph, Douglas Horn – the author of the Telos whitepaper and the CEO of GoodBlock, a development company that helps develop Telos – said that Coin-based fundraising is a tricky problem for both existing and new projects.
“Many crypto projects face similar challenges to ours. Telos has never raised money in a token sale, but many who have done ICOs see their finances running out before their projects are market ready, ”he said. “These projects find themselves with token reserves that they cannot sell without immediately raising their prices when liquid tokens hit the market.”
A possible solution is the new product from Telos: the T-Bond. T-Bonds are bundles of replaceable tokens that are locked into non-replaceable tokens (NFTs) until a certain condition is met, such as the expiration of a certain time or the launch of a mainnet.
As a result of the sale of T-Bonds, projects can hypothetically raise funds without refueling their symbolic prices. Additionally, with the advent of yield-bearing tokens, T-Bonds have the potential to become a tool for investors to hedge returns as well:
“For tokens that have rewards, T-Bond NFTs can act in the same way as a T-Bill as a hedge against changing prices,” Horn said. “So that creates an exciting derivative-like DeFi primitive.”
Unsurprisingly, one of T-Bonds’ first applications will help Telos build liquidity for its own TLOS token. TLOS has had a brutal year as much of the rest of the blockchain ecosystem has thrived, going from $ 0.05 per token to $ 0.02.
However, Horn says that lack of liquidity, not adoption, is the main barrier to price hike.
“Investors are constantly coming to us with questions about the project […] but they haven’t made the big investments they would like because there isn’t much liquidity, meaning their own investments – even modest investments of tens of thousands of dollars – would bring in 5-10x the market price there. ”
As a solution, Telos has drawn up a strategy called the TULIP (Telos Uniswap Liquidity Implementation Plan): Telos will raise funds through a T-Bond sale which will then be used to seed a liquidity pool on Uniswap, a plan inspired on the successful launch of Katalyo by Uniswap, a tokenized dApp for real estate on Telos.
With a new bull market dawning and projects looking to make money, Horn also believes that T-Bonds could help a wide variety of other projects with their funding issues as well.
“In the same way that T-Bond NFTs help Telos level up by solving our liquidity and volume issues, we believe we can help others. I think it can create a really strong market for primary sale fundraising followed by secondary market hedging. “