What Is Ribbon Finance (RBN)?

Ribbon Finance (RBN) is a blockchain protocol that provides users with sophisticated decentralized financial (DeFi) products. According to its whitepaper, Ribbon Finance combines financial instruments like options contracts, futures, and fixed income to boost returns for its customers.

Interestingly, Ribbon Finance developers researched that users often prefer borrowing stablecoins like USDT or Dai. In such cases, option writing strategies present more lucrative yields while maintaining exposure to an underlying asset. However, these are complex financial methods that require subject matter expertise. Because of this, most people avoid options as a form of investment. Also, the funds that use such techniques charge high fees and are primarily available to institutional investors. 

Ribbon aims to use option vaults that deploy smart contracts to automate various options strategies to bring sophisticated financial products to the masses. Smart contracts are just like regular contracts; however, instead of being drafted on paper, these contracts run in the form of protocols on the blockchain. Users can deposit their assets into a smart contract that automatically deploys a particular options strategy. Option vaults are relatively inexpensive because fewer transactions in bulk than many individual transactions reduce the gas fee. 

The primary objective that Ribbon Finance serves is to introduce structured products into the DeFi space. Structured products are pre-packaged investments that often incorporate interest-bearing assets and derivatives. Product designers usually link these funds to an index or a basket of assets to help customers achieve highly customized risk-return goals. Ribbon Finance uses financial engineering to create structured financial products that bring long-term yield. 

Notably, the platform's first product, Theta Vault, focuses on yield through two automated options strategies on ETH and WBTC, namely covered call and put selling. According to the whitepaper, Ribbon v2 is the latest version of Ribbon's Theta Vault product, improving the existing vault and decentralizing the operations. V2 improves capital efficiency, meaning it offers better returns on investment. Also, the new version of Theta Vault doesn't charge withdrawal fees from users. Further, through MetaVault, users can take advantage of the highest-yield farming tactics while reducing gas costs.

Additionally, the native token of Ribbon Finance is RBN, which was initially a governance token. The token oversees the protocol's development and can solicit feedback from the community on crucial aspects, such as the pricing model. However, gradually the development team explored other ways to utilize the RBN token to make it integral to the Ribbon ecosystem. Also, the platform can use the token to align incentives amongst the various players, such as liquidity mining programs and grants. Moreover, the RBN token groups all present and future Ribbon goods. 

History of Ribbon Finance

Julian Koh is the cofounder of Ribbon Finance. He has previously worked with Coinbase as a software engineer. The team officially announced Ribbon on February 15, 2021, and seeks to roll out sRBN tokens toward the end of 2021 as the first phase, followed by additional features as a second-phase release in 2022. 

How Are RBN Tokens Staked?

A key aspect of Ribbon tokenomics is the staking architecture. RBN holders can stake their RBNs on the platform and receive Staked Ribbons (sRBN) in exchange. The sRBN uses on-chain governance to execute proposals autonomously instead of a loose consensus. The governance authority of tokens is not immediately beneficial to token holders in many DeFi initiatives, resulting in voter apathy and a general lack of interest in the token. 

The team designed the sRBN token so that the more long-term users stake their RBN tokens, the more voting power they receive. Additionally, long-term users receive higher future RBN rewards and a more significant share in the Ribbon protocol revenue. This model aligns incentives by giving the longest-term RBN stakeholders more power and prizes. Fleeting speculators will lose governance powers, rewards, and protocol revenue.

How Many RBN Tokens Are There?

Ribbon Finance has a total of 30 million RBNs in supply. To bootstrap Ribbon Governance, 3% of the total supply was distributed to the community.

How to Buy Ribbon Finance (RBN) Tokens

You have a lot of options when it comes to Ribbon Finance (RBN), including Coinbase. You can buy Ribbon Finance on Coinbase.com or Coinbase app, anywhere Coinbase is available.