XLS-??d Bonds — Bonds for XRPL Protocol Chains

Title: Bonds
Type: Draft
Author:
	Denis Angell, XRPL-Labs <a href="https://github.com/dangell7/">(dangell7)</a>
Affiliation: XRPL-Labs

Problem Statement

The XRPL protocol, while robust and efficient for transferring digital assets and currencies, does not natively support more advanced financial instruments such as bonds. Bonds are debt securities that are similar to IOUs. Borrowers issue bonds to raise money from investors willing to lend them money for a certain amount of time. The lack of a standardized protocol for creating and managing bonds on the XRPL protocols limit the functionality and potential use cases for the ledger. To address this gap and enhance the capabilities of XRPL protocols, we propose a new amendment that introduces a lightweight and flexible framework for bond issuance and management. This will enable developers and users to create, trade, and manage bonds, thereby expanding the financial utility of XRPL protocols and opening up new opportunities for decentralized finance (DeFi) applications.

Amendment

The proposed amendment introduces a new framework for bond issuance and management on the XRPL protocols, providing a lightweight and flexible way to create, trade, and manage bonds, thus expanding the financial capabilities of the XRPL for decentralized finance applications.

The amendment adds:

A new type of ledger object: ltBondOffering

Three new transaction types:

BondOffer
BondMint
BondAction

New Ledger Object Type: `BondOffering`

The BondOffering ledger object is a new on-ledger object that represents a bond on the XRPL. This object is used to store the details of a bond, including the issuer, the underlying asset, the term, the coupon rate, the balloon rate, the coupon delay, the maturity date, the principle, the dated date, the DID, the coupon frequency, the bond ID, and the offering ID.

The object has the following fields:

Field	Type	Required	Description
sfOwner	AccountID	✔️	The account that created the bond.
sfOwnerNode	UInt64	✔️	Reference to the owner directory node that the `BondOffering` object is part of.
sfIssuer	AccountID	✔️	The account that issued the bond.
sfFlags	UInt32	✔️	The flags of the bond offering.
sfOfferingStart	UInt32	✔️	The start time of the offering, specified as a UNIX timestamp.
sfOfferingEnd	UInt32	✔️	The end time of the offering, specified as a UNIX timestamp.
sfAsset	Currency	✔️	The underlying asset of the bond.
sfFees	Object	✔️	An object containing various fees associated with the bond.
sfTerm	UInt32	✔️	The term of the bond in months.
sfCouponRate	UInt32	✔️	The coupon rate of the bond as basis points.
sfBalloonRate	UInt32	✔️	The balloon rate of the bond as basis points.
sfMaturityDate	UInt32	✔️	The maturity date of the bond.
sfPrinciple	Amount	✔️	The principle of the bond.
sfDatedDate	UInt32	✔️	The dated date of the bond.
sfDID	String	✔️	The DID of the bond.
sfCouponFrequency	UInt32	✔️	The coupon frequency of the bond as weeks.
sfOfferingID	Hash256	✔️	The ID of the bond offering.

Example BondOffering object:

{
   "LedgerEntryType": "BondOffering",
   "Owner": "rU9XRmcZiJXp5J1LDJq8iZFujU6Wwn9cV9",
   "OwnerNode": "0000000000000000",
   "Issuer": "rHb9CJAWyB4rj91VRWn96DkukG4bwdtyTh",
   "Flags": 1,
   "OfferingStart": 743171558,
   "OfferingEnd": 743171568,
   "Asset": {
      "currency": "USD",
      "issuer": "rHb9CJAWyB4rj91VRWn96DkukG4bwdtyTh",
   },
   "Fees": {
      "IssuanceFee": 125,
      "RedemptionFee": 500,
   },
   "Term": 24,
   "CouponRate": 125,
   "BalloonRate": 125,
   "MaturityDate": 743171568,
   "Principle": "1000",
   "DatedDate": 743171568,
   "DID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05",
   "CouponFrequency": 52,
   "BondID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05",
   "OfferingID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05"
}

New Transaction Type: `BondOffer`

The BondOffer transaction is used to create a new bond offering on the XRPL. This transaction specifies the terms of the bond offering, including the offering start and end, quantity, asset, term, coupon rate, balloon rate, coupon delay, maturity date, principle, dated date, DID, coupon frequency, bond ID, and offering ID.

Field	Type	Required	Description
sfTransactionType	String	✔️	The type of transaction, which is "BondOffer" for creating a new bond offering.
sfAccount	AccountID	✔️	The account creating the bond offering.
sfFlags	UInt32	✔️	The flags of the bond offering.
sfOfferingStart	UInt32	✔️	The start time of the offering, specified as a UNIX timestamp.
sfOfferingEnd	UInt32	✔️	The end time of the offering, specified as a UNIX timestamp.
sfQuantity	UInt64	✔️	The quantity of bonds in the offering.
sfAsset	Object	✔️	The underlying asset of the bond.
sfFees	Object	✔️	An object containing various fees associated with the bond.
sfTerm	UInt32	✔️	The term of the bond, in months.
sfCouponRate	UInt32	✔️	The coupon rate of the bond, as basis points.
sfBalloonRate	UInt32	✔️	The balloon rate of the bond, as basis points.
sfMaturityDate	UInt32	✔️	The maturity date of the bond, specified as a UNIX timestamp.
sfPrinciple	String	✔️	The principle of the bond.
sfDatedDate	UInt32	✔️	The dated date of the bond, specified as a UNIX timestamp.
sfDID	UInt32	✔️	The DID of the bond.
sfCouponFrequency	UInt32	✔️	The frequency of coupon payments, in weeks.
sfOfferingID	Hash256	❌	The ID of the offering, if refunding.

Example BondOffer transaction:

{
   "Account": "raKG2uCwu71ohFGo1BJr7xqeGfWfYWZeh3",
   "TransactionType": "BondOffer",
   "Flags": 1,
   "OfferingStart": 743171558,
   "OfferingEnd": 743171568,
   "Quantity": "1000",
   "Asset": {
      "currency": "USD",
      "issuer": "rHb9CJAWyB4rj91VRWn96DkukG4bwdtyTh",
   },
   "Fees": {
      "IssuanceFee": 125,  // 125 basis points (1.25%)
      "RedemptionFee": 500,  // 500 basis points (5%)
   },
   "Term": 24, // In Months
   "CouponRate": 125, // As Basis Points
   "BalloonRate": 125, // As Basis Points
   "MaturityDate": 743171568,
   "Principle": "1000",
   "DatedDate": 743171568,
   "DID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05",
   "CouponFrequency": 52, // As weeks (once per year)
   "OfferingID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05", // If Refunding
}

`BondOffer` Flags

The BondOffer transaction uses flags to specify the type of option, the action being taken, and whether the position is being opened or closed.

Flag Name	Value	Description
tfTerm	0x00000001	Set for long-term bonds.
tfSerial	0x00000002	Set for serial bonds.
tfBalloon	0x00000004	Set for balloon bonds.
tfCallAll	0x00020000	Set for bonds callable in entirety.
tfCallPartial	0x00040000	Set for bonds callable in part.
tfCallLottery	0x00080000	Set for bonds callable by lottery.

New Transaction Type: `BondMint`

The BondMint transaction is used to mint a new bond contract from an existing bond offering on the XRPL. This transaction allows the holder of a bond offering to mint new bonds, increasing the supply of the bond in the market.

Field	Type	Required	Description
sfTransactionType	String	✔️	The type of transaction, which is "BondMint" for minting a new bond.
sfAccount	AccountID	✔️	The account minting the bond contract.
sfOfferingID	Hash256	✔️	The ID of the offering ledger entry object.
sfAmount	Amount	✔️	The principle of the bond contract. This is the initial investment paid by the buyer.

Example BondMint transaction:

{
   "Account": "raKG2uCwu71ohFGo1BJr7xqeGfWfYWZeh3",
   "TransactionType": "BondMint",
   "OfferingID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05",
   "Amount": {
      "currency" : "USD",
      "issuer" : "rHb9CJAWyB4rj91VRWn96DkukG4bwdtyTh",
      "value": "1000"
   },
}

New Transaction Type: `BondAction`

The BondAction transaction is used to perform actions on a bond contract on the XRPL. This transaction allows the holder of a bond to claim their coupon or reclaim their principle.

Field	Type	Required	Description
sfTransactionType	String	✔️	The type of transaction, which is "BondAction" for performing actions on a bond.
sfAccount	AccountID	✔️	The account performing the action on the bond contract.
sfBondID	Hash256	✔️	The ID of the bond ledger entry object.
sfFlags	UInt32	❌	A set of flags to distinguish the type of bond action being taken.

Example BondAction transaction:

{
   "Account": "raKG2uCwu71ohFGo1BJr7xqeGfWfYWZeh3",
   "TransactionType": "BondAction",
   "BondID": "C24DAF43927556F379F7B8616176E57ACEFF1B5D016DC896222603A6DD11CE05",
   "Flags": 262144
}

`BondAction` Flags

The BondAction transaction uses flags to specify the action being taken on the bond.

Flag Name	Value	Description
tfMature	0x00020000	To reclaim the principle.
tfCoupon	0x00040000	To claim the coupon.

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XLS-??d Bonds — Bonds for XRPL Protocol Chains

Problem Statement

Amendment

New Ledger Object Type: `BondOffering`

New Transaction Type: `BondOffer`

`BondOffer` Flags

New Transaction Type: `BondMint`

New Transaction Type: `BondAction`

`BondAction` Flags

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XLS-??d Bonds — Bonds for XRPL Protocol Chains

Problem Statement

Amendment

New Ledger Object Type: BondOffering

New Transaction Type: BondOffer

BondOffer Flags

New Transaction Type: BondMint

New Transaction Type: BondAction

BondAction Flags

New Ledger Object Type: `BondOffering`

New Transaction Type: `BondOffer`

`BondOffer` Flags

New Transaction Type: `BondMint`

New Transaction Type: `BondAction`

`BondAction` Flags