According to an announcement on Wednesday from the Telos blockchain, it would launch a new tool aimed at helping low-liquidity projects fundraise: "T-Bond" - an NFT product.
Douglas Horn, the author of the Telos whitepaper and the CEO of GoodBlock - a development firm who assists with Telos core development, noted during an interview that token-based fundraising is a tough issue for established as well as new projects.
"Many crypto projects face challenges similar to our own. Telos never raised any money in a token sale, but many that have done ICOs see their finances running low before their projects are market ready," he said. "These projects find themselves with token reserves they can't sell without immediately tanking their prices as liquid tokens go on the market."
There is one possible solution to the question: the T-Bond. T-Bonds are bundles of fungible tokens that have been locked into non-fungible tokens (NFTs) until it meets a certain condition, such as the passage of a certain amount of time or the launch of a mainnet.
Projects can hypothetically raise funds without taking their token prices through selling T-Bonds. In addition, as the yield-bearing tokens emerge, T-Bonds are also possible to be a tool for investors to hedge yield:
"For tokens that have staking rewards, T-Bond NFTs could act similarly to a T-Bill as a hedge against changing rates," said Horn. "So that creates an exciting derivative-like DeFi primitive."
There is no surprise that one of the first applications of T-Bonds will be helping Telos build liquidity for its own TLOS token. The token has experienced a brutal year as it dropped from $0.05 per token to $0.02 while much of the rest of the blockchain ecosystem enjoyed a flourishment.
But Horn notes the major obstacle to price appreciation is a lack of liquidity rather than adoption.
"Investors constantly come to us asking about the project [...] but they have not made the large investments they would like because there's not much liquidity, meaning that their own investments - even moderate investments in the tens of thousands of dollars - would create a 5-10X of the market price right there."
Meanwhile, Horn thinks that T-Bonds might well help a wide range of other projects with their funding woes with a new bull market emerging and projects looking to cash in.