Lenders

Within the Lucia ecosystem, lenders are not only participants but also beneficiaries of the liquidity provision process, rewarded for their pivotal role in facilitating transactions. To participate, lenders are required to contribute to the liquidity pool by providing supported tokens such as USDC, USDT, AVAX, MATIC, and ETH.

Bonds as Debt Securities:

To enable liquidity providers or lenders to supply their resources, a novel avenue emerges in the form of bonds. Bonds are issued with specific contractual terms and maturity dates, offering lenders both security and potential returns.

Bond Coupon Formula:

Where Coupon Payment is the periodic interest paid, Face Value is the principal amount, Annual Interest Rate is the interest rate per annum, and Payment Frequency is the number of payments in a year.

Bonds signify a form of debt security, with Lucia acting as the issuer, indebted to bondholders who serve as lenders or liquidity providers. The terms of the bond define Lucia's commitment to repay the principal and interest payments, colloquially referred to as "coupon," upon maturity.

The bond mechanism underscores mutual responsibilities: Lucia pledges to issue bonds at a discounted rate, providing corresponding interest as outlined in the bond agreement. Simultaneously, lenders obligate themselves to lock funds, accessing them exclusively upon the agreed maturity period to claim stipulated interests.

Compared to volatile stocks, bonds generally exhibit lower volatility, particularly evident in short and medium-term bonds, rendering them comparatively safer investments. An added dimension unfolds as bonds potentially enter the secondary bond market, presenting opportunities for trading.

Profit-Sharing: Revenue from various channels such as insurance premiums and investment returns may be distributed among lenders.

Governance Tokens: Lenders are awarded stLCI governance tokens which offer both voting privileges and an ownership stake in the protocol.