4.2.1 Promissory Note Tokens (PNTs)

Visit PNTs page こちら.
For the list of supported borrowers, click こちら.

 

Promissory Tokens (PNTs) are tokens issued on CoinFLEX.com and sold for $1.00 per token. The tokens have the following traits:

  • Tokenised representation of the legal and contractual rights of the underlying Promissory Note
  • As the underlying borrower pays interest, tokens will accrue interest on chain
  • As the underlying borrower repays, tokens will be redeemable for $1 at the end of each month

The issuers of these tokens is a trust owned and set up by CoinFLEX. The trust has one purpose: Lending to borrowers (trading firms primarily) on a fixed term basis less than 270 days. These will be bilateral loans between the trust and the borrower and the buyer of the token will not be party to the transaction in any way.

 

Corporate Loan Terms

The loans will be initially 1 month loans at a fixed interest rate with payments made on chain daily via a deduction from the borrower’s CoinFLEX account and credited to the trust’s account. The borrower may choose to borrow again each month, changing the amount or interest rate with mutual agreement between the borrower and the trust.

 

CoinFLEX involvement in Promissory Note Tokens (PNTs)

  • CoinFLEX will help with automated repayments between borrowers and the corresponding trusts, both being users of CoinFLEX
  • CoinFLEX will help facilitate any interest payments made between the trust and the token holders via the blockchain
  • CoinFLEX will help facilitate processing of the trusts offer of a $1.00 redemption or whatever redemption price (if any) that the trust offers at the end of each month when the borrow facility expires.
  • In the event of a default, CoinFLEX would register the default in the country that the borrower is incorporated and has the right to sue over the assets.
  • Further, in the event of default Coinflex has the obligation to cooperate with token purchaser/counsel/representatives to take all necessary measures in order to collect the outstanding debt and has the obligation to use any receipts of collection efforts whether partial or in full to purchase back the tokens

 

CoinFLEX will not

  • Guarantee a $1.00 redemption value
  • Guarantee payment of interest to holders of PNTs.

Each token will have different interest rates and these will be displayed at listing.

 

Auction Process

The rate a borrower’s corporate loan with the trust is set at will depend on an auction process where buyers of PNTs can submit bids to receive PNTs. The bids will take the following format:

  • Amount: amount of USD to spend buying PNTs at the issuance.
  • Rate: If you leave this blank, it will act as a non-competitive bid, buying the auction at the clearing rate, no matter what rate as long as the qualifying minimum raise threshold is reached.

The borrower will also set in advance the amount of USD they wish to borrow from the trust as well as maximum interest rate they are willing to pay.

 

Secondary Markets

After the issuance process, these tokens will trade on central limit order books (CLOBs) on CoinFLEX. Each PNT will have its own order book and:

  • There will be no leverage trading allowed on CoinFLEX
  • The CoinFLEX Trust will not be allowed to sell more tokens than specified in the auction launch. However if a token is not fully subscribed at launch, the CoinFLEX Trust has the option to offer the unsubscribed portion (not more than) on the orderbook at a price of $1.00 for secondary market buyers to purchase.
  • Token holders may freely trade their PNTs on the orderbook thereby having the benefit of liquidity if needed.
  • Since these tokens will be on ERC20 and SLP blockchains, we expect DEXes and other platforms to list trading support for these tokens.

 

New PNTs  Issuances

CoinFLEX may decide to create new trusts, issue new PNTs and loan to borrowers from time to time. We will use the following as a helpful guide in evaluating borrowers. This is initially not mandatory but will become so and some firms may specialise in one or two activities rather than all 3. We will be able to publish the stats of firms that opt in to making some of these data public on a weekly basis.  

 

Trading Activities:

  1. Volume Requirement:
    1. $300M+ per month in volumes, excluding all volume in repo markets and USDC/USDT pairs.
    2. Spot, futures, perps, rates, spreads, and PNT markets count towards the firm’s volume requirement.
  2. BTC Perps:
      1. 3 BTC up, 10 bps wide (the bid and the offer must be tighter or equal to 0.10% apart)
      2. 60% uptime
  3. ETH Perps:
    1. 65 ETH up, 20 bps wide (the bid and the offer must be tighter or equal to 0.20% apart)
    2. 60% uptime
  4. BCH Perps
    1. 50 BCH up, 20 bps wide (the bid and the offer must be tighter or equal to 0.20% apart)
    2. 60% uptime
  5. DeFi perps
    1. Must quote 4 of the following perpetual markets:
      1. COMP, SNX, CRV, YFI, BAL, UNI, BAND, SUSHI
    2. Quote sizes:
      1. COMP: 75 up
      2. SNX: 300 up 
      3. CRV: 4000 up
      4. YFI: 0.1 up
      5. BAL: 100 up
      6. UNI: 400 up
      7. BAND: 150 up
      8. SUSHI: 500 up
    3. All coins quoted 30 bps wide (the bid and the offer must be tighter or equal to 0.3% apart)
    4. 60% uptime
  6. BTC perp/quarterly spreads
    1. 2 quarters (front quarter + whichever you prefer)
    2. 10 BTC up, $5 wide (the bid and the offer must be tighter or equal to 5$ apart)
    3. 80% uptime
  7. ETH perp/quarterly spreads
    1. 2 quarters (front quarter + whichever you prefer)
    2. 75 ETH up, $1 wide (the bid and the offer must be tighter or equal to $1.5 apart)
    3. 80% uptime

(CoinFLEX reserves the right to change these requirements at any time with 30 days prior notice)

 

FLEX Ownership:

  • For loans below $10M, the borrower will be required to lock up 2% of the value of the loan for 3 months. I.e. for a $5M loan, the borrower will need $100K of FLEX.
  • For loans above $10M, the borrower will be required to lock up 1% of the value of the loan for 3 months.

 

 

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