Buttonwood Zero is a long-term debt market featuring zero-coupon bonds & zero-liquidations.
ButtonZero is a decentralized application built on Ethereum that allows for:
The Buttonwood Tranche protocol can create fully-collateralized zero-coupon bonds with zero-liquidations and zero margin calls. These bonds are very configurable and have the following parameters:
- Collateral asset: The asset backing the bond. Its volatility generates the risk that senior tranche holders transfer to junior tranche holders.
- Maturity date: These bonds mature at a certain date, after which the collateral asset is distributed among the borrowers and lenders.
- Tranche ratios: These define the way that risk is transferred from more senior tranches to more junior tranches. They are generally denoted in terms of percent, i.e. a "20/30/50" bond represents a 20% A-Tranche, 30% B-Tranche and 50% Z-Tranche. This in turn means that the A-tranche holders are entitled to the first 20% of the value. After the A-Tranche has been made whole, the B-Tranche holders receive the next 30%, with the remainder going to the Z-Tranche holders.