B. Market Making

The above applications depend on the existence of liquidity markets in certain financial domains. Traders hoping to profit from such a market can deposit liquidity into BNB, an automated market maker protocol.

BNB supports arbitrary trading pairs, enabling direct sales of BondMor, such as BNB/Mor. Providing liquidity to these assets is relatively low risk since you know their relative prices at maturity, so your loss as a liquidity provider is capped.

Because 1 BNB is guaranteed to be worth 1 Mor at maturity, the future value of BNB/Mor liquidity Mor is predictable (as long as the parameterization is safe). This means the system can allow these liquidity Mor as collateral for minting (even without needing liquidation support). This enables users to increase their liquidity supply by injecting Mor and BNB into a unified liquidity pool, borrowing more BNB using these liquidity Mor, trading half for Mortonn, depositing BNB and Mor to create more liquidity Mor, and repeating until fully leveraged.

More configurable automated market makers might move from merely trading Mor to minting and destroying Mor or trading between Mor with different maturities to arbitrage different yields. Balancer pools can hold BNB with multiple maturities and can be set with lower fees.