BondAppetite Stablecoin Peg Lost

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BondAppetite

BondAppetite was a stablecoin backed by real-world yield generating bonds. The bonds that back USDap are supposedly stored by a licensed custodian in a stable jurisdiction.

After multiple excursions below $1, the peg appears to have been lost at some point on April 18th, 2022. On June 8th, 2022, the protocol began an apparent buy-back of the tokens at a $0.97 USD price, however the token price remains far lower. There have been no further updates to social media.

About BondAppetite

"The first decentralized lending protocol with a stablecoin 100% backed by yield generating bonds." "USDap is the first decentralized stablecoin that is based on a basket of real-world debt obligations." "An infrastructure that connects decentralized finance and traditional debt instruments with the participation of regulated securities and cryptocurrency broker/dealers."

"The growth of the USDap supply expands the portfolio of bonds and boosts the price of BAG." "USDap is backed by real-world fixed-income securities (bonds) provided as collateral for the loan by borrowers." "USDap is backed by a basket of debt obligations with different terms, interest rates (3-7.5% per annum), and redemption dates." "Receive interest income in USDC every quarter from bonds that back the USDap. The growing value of BAG helps grow the emission of USDap."

"The main asset inside the protocol’s ecosystem is the stablecoin — BondAppétit USD (USDap). The price of USDap equals $1 at all times. The token is issued only if the protocol has sufficient collateral. Information regarding the collateral can be checked through blockchain at any time. The USDap price is balanced automatically based on a basket of real-world debt obligations that form part of the protocol’s assets."

"USDap is a stablecoin done right. Algorithmic automated issuance, real-world assets as collateral, and publicly available oracles for real-time collateral verification." "The bonds that back USDap are stored by a licensed custodian in a stable jurisdiction. Anyone can check their availability any time online. No single protocol with fiat collateral has this level of transparency." "The price of USDap equals $1 at all times and the asset is issued only with sufficient collateral."

"The borrowing process is built in the most convenient way for a borrower in order to ensure compliance with regulatory and financial requirements and the conclusion of an appropriate agreement. A borrower can receive funds in fiat as well as in crypto." "BAG holders receive coupon payments from bonds that back the USDap stablecoin. Interest income in USDC is distributed among token holders every quarter." "USDap has its own crypto liquidity pools which are partially composed of liquidity flows coming from real-world assets."

"BondAppetit is a decentralized protocol controlled only by its community." "There is no centralized issuer behind USDap — tokens are issued automatically by a smart-contract only when required collateral is available in the real world. Anyone can check collateral any time online at bondappetit.com/collateral. No single protocol with fiat collateral — neither USDC, nor USDT — has this level of transparency." "BondAppet is governed by its community. All token holders can participate in governing the protocol. Any member of the community with more than 1,000,000 BAG tokens can create a proposal."

Founder and CEO Artem is "[f]ormer head of the Blockchain Lab at Deloitte. For over seven years, Artem has been one of the key opinion leaders in the CIS region in blockchain and tokenization. Since 2011, he has been a lawyer by trade and an entrepreneur." CTO "Vlad has over 17 years of experience in web development. He launched and managed a number of major ICT products and services on the CIS market." "USDap represents a means of transferring value and it is defined as such exclusively by market participants. The token itself does not imply any obligations of the protocol, any of its participants, or third-parties."

"The price of USDap equals $1 at all times and the asset is issued only with sufficient collateral. USDap is 100% backed by yield-generating bonds. The bonds are stored by a licensed custodian in a stable jurisdiction. Anyone can check their availability any time online. The information is transmitted from the custodian and is digitally signed making data spoofing impossible." "In the event of a significant change in asset prices or a default, the protocol may initiate additional capitalization."

"During the second development stage which is planned to start in 2022, BondAppétit aims to create a borrowing platform that will operate directly with issuers of fixed-income debt instruments. Therefore, providing access to traditional financial instruments in a fully decentralized manner. As a platform, BondAppétit will charge fees from the borrowers for each deal completed on the platform. Another feature that is vital for correct operations of the protocol during the second stage is the automated prediction system that will forecast asset price, calculate coupon payments and forecast possibility of default for each issuer."

"You must consider the risk that BondAppétit may not be able to implement the Protocol Launch Phases described herein. You must bear in mind that the launch of Phase 2. RWA Collateralization and Phase 3. Direct Investment may be postponed or cancelled. Your investments are not secured. In case it is not possible to implement any of the phases of the BondAppétit protocol, you may lose all of your investments."

"BondAppetit was launched on April 5[, 2021]. In the first few days since launch, the volume of locked funds reached $8 million. In the first weeks since launch, the profitability of BondAppetit pools was hovering over 1,000% per annum, values which attracted many players from the DeFi market."

"First AMA session by BondAppetit founder Artem Tolkachev. Artem talked a lot about the development strategy, the regulatory environment, and other related issues. We recommend that you listen the recording of the AMA if you missed it or had joined late."

"First governance initiatives. Starting from the first days since launch, BondAppetit has implemented a community governance system. All key decisions are passed through a general vote."

After multiple excursions below $1, the peg appears to have been lost at some point on April 18th, 2022.

"BondAppetit is launching the USDap buyback procedure. The buyback procedure will involve the purchase of USDap/EUR on an OTC. We are offering a fixed purchase rate of 1 USDap = $1. The minimum amount for the transaction will be 30,000 USDap with the 3% transaction fee charged from our side (plus other fees charged by financial institutions)."

"In order to make an OTC transaction, you will be required to sign the relevant agreement and provide the documents requested for KYC procedures."

"The request for the transaction shall be made via email including the amount of the contemplated transaction (not less than 30,000 USDap), your personal details (including name/surname, wallet, and account information). Please note that we reserve the right to refuse to proceed with the transaction based on the provided information or change the type of the consideration for USDap indicated above."

"BondAppetite USD Price [as of November 4th, 2022]: $ 0.460" "USDap Total Supply: $1.09M"

This is a global/international case not involving a specific country.

The background of the exchange platform, service, or individuals involved, as it would have been seen or understood at the time of the events.

Include:

• Known history of when and how the service was started.
• What problems does the company or service claim to solve?
• What marketing materials were used by the firm or business?
• Audits performed, and excerpts that may have been included.
• Business registration documents shown (fake or legitimate).
• How were people recruited to participate?
• Public warnings and announcements prior to the event.

Don't Include:

• Any wording which directly states or implies that the business is/was illegitimate, or that a vulnerability existed.
• Anything that wasn't reasonably knowable at the time of the event.

There could be more than one section here. If the same platform is involved with multiple incidents, then it can be linked to a main article page.

The Reality

This sections is included if a case involved deception or information that was unknown at the time. Examples include:

• When the service was actually started (if different than the "official story").
• Who actually ran a service and their own personal history.
• How the service was structured behind the scenes. (For example, there was no "trading bot".)
• Details of what audits reported and how vulnerabilities were missed during auditing.

What Happened

The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.

Key Event Timeline - BondAppetite Stablecoin Peg Lost

Date	Event	Description
October 28th, 2021	Digital Fortress Investment Fund	A Medium post highlights the investment into Digital Fortress Investment Fund of $350,000.
November 5th, 2021 4:20:00 AM MDT	Project Announced On Twitter	A Twitter post explains the BondAppetite project.
November 9th, 2021 7:01:03 AM MST	H1 2021 Plans Released on Medium	The BondAppetite team releases a summary of the last 6 months. "The last month marked six months since the launch of BondAppetit. The protocol is still at the MVP stage, but it has already passed several important milestones." TBD more details.
December 5th, 2021 10:31:00 AM MST	Price Jumps Back To Peg	The price of USDap jumps from $0.841 USD back up to the peg at $0.996 USD.
March 31st, 2022 12:38:00 PM MDT	Lowest Local Price	The USDap token ultimately reaches a price of $0.681 USD before rebounding.
April 17th, 2022 7:30:00 PM MST	Peg Is Lost Again	The USDap token drops from $0.992 USD down to $0.903 USD, and continues to fall.
April 18th, 2022	Main Event	Expand this into a brief description of what happened and the impact. If multiple lines are necessary, add them here.
April 22nd, 2022 4:34:00 AM MDT	Price Local Minimum	The price continues dropping until a level of $0.682 USD is reached before starting a rebound.
April 22nd, 2022 6:19:00 AM MDT	Price Local Maximum	The price recovers to $0.844 USD, a peak before the price starts to fall back down again.
April 30th, 2022 11:55:00 AM MDT	Price Local Minimum	The price collapses to $0.666 USD, before starting a rebound again.
May 8th, 2022 4:15:00 AM MDT	Price Local Maximum	The price recovers to $0.841 USD, before starting to fall again without restoring the peg.
May 9th, 2022 5:20:00 AM MDT	Kredika Maker Announcement	An announcement on the MakerDAO forum is posted with a description of a new Kredika platform.
May 12th, 2022 6:30:00 AM MDT	Kredika Twitter Announced	BondAppetit announces Kredika on Twitter.
May 26th, 2022 1:27:00 PM MDT	Price Local Minimum	The price completes it's collapse all the way down to $0.508 USD before starting a slight recovery.
June 8th, 2022 3:44:00 AM MDT	USDap Buyback Procedure	BondAppetit mentions a new buy-back procedure for the USDap token.
July 10th, 2022 5:00:00 AM MDT	Further Low Price	The price reaches a new low of $0.452 USD briefly.
July 13th, 2022 4:26:00 AM MDT	Honourable Mention	Twitter user Proof of No Work mentioned this case along with other failed stablecoin projects in his Tweet.
October 15th, 2022 5:00:00 AM MDT	Further Low Price	The price reaches another new low of $0.408 USD before recovering slightly.
November 15th, 2022 4:19:00 PM MDT	Lower Price Shelf	The price collapses from $0.449 USD down to $0.281 USD before a very slight recovery.
November 21st, 2022 4:04:00 AM MDT	Lowest Price Recorded	The USDap token appears shows a price of $0.172 USD.
November 24th, 2022 9:01:00 AM MDT	Major Price Jump	Price climbs rapidly up to $0.785 USD.
December 14th, 2022 10:33:00 AM MDT	Another Price Jump	The price climbs back up to $0.976 USD.
December 22nd, 2022 4:40:00 AM MDT	Price Approaching Peg	The price has now reached $0.992 USD before starting to fall slightly.
January 28th, 2023 1:00:00 PM MDT	Peg Restored	The price reached $1.026 USD from $0.985 USD, shooting past the peg.

Total Amount Lost

The total amount at risk has been estimated at $8,000,000 USD. The total amount lost is unknown.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

Immediate Reactions

How did the various parties involved (firm, platform, management, and/or affected individual(s)) deal with the events? Were services shut down? Were announcements made? Were groups formed?

Ultimate Outcome

What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

Total Amount Recovered

The total amount recovered is unknown.

What funds were recovered? What funds were reimbursed for those affected users?

Ongoing Developments

What parts of this case are still remaining to be concluded?

General Prevention Policies

It is unclear whether the buyback is actually available, and why the price has not increased given the apparent buyback. It is unclear whether there is a loss situation here.

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.