Step 1: Select an Offer to invest in
Step 2: Place bid on desired Offer
Step 3: Receive interest-paying Maple SmartBonds
Step 4: Redeem the Maple Debt Tokens for repayment plus interest
Yes, the Maple SmartBonds are secured by a basket of cDai which acts as collateral. The ratio of cDai : SmartBonds is 100%.
Yes, the tokens are ERC20 so they can be transferred.
Yes you can cancel your bid at any time up until the earlier of the Offer Period ending or the Issuer activating the bonds (if enough bids received).
Yes, Investors can bid on all classes in an Offer except the Equity Class, which is retained by the Issuer to keep skin in the game.
Issuers can create multiple Classes of Maple SmartBond to offer Investors. Each class can have a different interest rate because they have different risk grades.
Class 1 Maple SmartBonds are repaid first, so they have more protection in the event of a shortfall in repayments. Class 2 Maple SmartBonds are repaid after the Class 1, so they have a higher risk of incurring a loss, justifying a higher interest rate.
At Maturity Date, the Dai withdrawn from Compound may be insufficient to repay all of the Maple SmartBonds.
Any loss is first deducted from the Equity Class Maple SmartBonds. If the loss is greater than the Equity Class, it gets applied to the Class 2 Maple SmartBonds. The Class 1 Maple SmartBond is the last to incur losses.
A shortfall may occur if:
1. (Code flaw on Compound) Compound’s smart contracts have been audited previously, however an undetected vulnerability may result in funds being inaccessible.
2. (Systemic Compound liquidations) At the time of writing, the collateral ratio on Compound is ~400%. While unlikely, a drop in the price of Ether of more than 60% in a very short time period would trigger liquidations on Compound. This could cause undercollateralisation of the Maple SmartBonds and may result in a loss for Investors.
3. (Compound supply rate falls below the Class 1 interest rate) The ratio of cDai to MDTs on Activation should be 100%, so Investors will not suffer a loss of principal if the Compound lending rate falls significantly. Even if the Compound lending rate were zero, it would be unlikely for the Investors not to receive all accrued interest. This is because the interest is repaid from the cDai before the Equity Class receives any repayment.
No, once the Maple SmartBonds become Active after the Offer Period ends, they have a fixed Maturity Date on which Investors are repaid. Repayment can not be triggered before the Maturity Date.