FAQ

Please be patient with us as we build out our FAQ sheet

What is a zero-coupon bond, and how is the return calculated?

A zero-coupon bond is a bond that makes zero interest payments, and instead trades at a deep discount. The bond is later redeemable at face value. To calculate the implied rate of return: Yield = (Face Value / Purchase Price) - 1

More: Zero Coupon Bonds

What is margin leverage? -- Thread: The Dangers of Margin Lending

How does ButtonZero use Uniswap v3?

ButtonZero uses Uni v3 like an order book. Thread: Button Zero is not a liquidity pool, even though it routes through Uniswap v3

What security measures are taken to ensure the safety of user funds in ButtonZero contracts?

We're audited and have strong peer reviews. We have a bounty program (up to $500K) on Immunefi, which covers our contracts and rewards people for discovering exploits (Answer)

Why is the interest rate for selling bonds shown as a range, not a fixed amount?

The range accounts for the slippage users incur with an increase in size. Lower liquidity can result in wider ranges and greater slippage. To avoid slippage, users can place 'Ask' Orders.

How do you place orders on ButtonZero?

Users can place bid/ask (limit) orders by depositing liquidity at a certain price. Thread: Placing a Bid: ButtonZero functions as an order book

What are the bond parameters? How often are new bonds issued?

New bonds are deployed on the 1st of every month. The parameters of the bond are: six-month duration, zero-coupon, overcollateralized, and non-callable. The tranche ratios are A:B:Z -- 20:30:50. The bonds are collateralized by either $ETH, $wBTC, or $AMPL. How would Bitcoin and Ethereum work as collateral options and are they also going to be rebasing?

Yes, we created a rebasing wrapper for non-rebasing assets like ETH & BTC that have robust oracles for them to rebase to a dollar. It simplifies a number of issues (See more).

Where did Buttonwood get its name?

Buttonwood takes its name from the Buttonwood Agreement, which is the founding document of the New York Stock Exchange signed on May 17, 1792.

Calculations:

How do you calculate the Discount rate? Interest rate? What is the difference between the discount rate and the interest rate? Thread: Discount Rate vs. Interest Rate

What is the CDR? How is it calculated?

The CDR means the collateral to debt ratio. It is calculated

How is the collateralization calculated? Why does it differ across tranches?

The collateralization (%) changes based on the price movements of the collateral asset backing that tranche. It is higher for A-Tranche tokens than B-Tranche tokens because the A-Tranche is paid out first.

What does it mean for collateralization to be at least 100% at maturity?

The collateralization (%) only matters upon maturity of the bond, as it determines how much each tranche token can be redeemed for. If it is above 100% upon maturity, tokens for that tranche (A,B) are worth $1.00 (Tweet).

How can I become a liquidity provider on ButtonZero?

As a liquidity provider, users can take a market-netural approach. By depositing liquidity, users are rewarded with a fee of 1% of the relevant trading pool. For a step-by-step guide to becoming an LP on ButtonZero, go to this page.

Why are Auctions beneficial?

A well-functioning primary market is transparent, cost-effective, competitive, and brings together a broad range of investors.