Basket Bond Tokens, explained: Construction, pricing, lifecycle, and where they go

What a Bond Token is

A Bond Token (BT) is an onchain claim on a real, publicly traded corporate bond, held one to one under regulated custody. It is legally issued in Bermuda through a dedicated segregated account and the underlying bonds are bought and held through a licensed broker there, ring-fenced from any other business. One token represents $100 of face value. Face value is the amount the issuer repays at maturity, the number the coupon is calculated on, and the unit a bond is quoted in: a price of 95 means $95 for every $100 of face, and bonds are bought and sold in whole $1,000 increments of it, above a minimum lot.

A basket Bond Token is the same instrument, except that the $100 of face is spread across several bonds in fixed proportions. Holding one token means holding a slice of every bond in the basket, in proportions set on the day the basket was minted and never changed after.

Construction: equal dollars at mint

At mint, every bond in a basket receives the same dollar allocation. We do not buy equal face amounts of each bond, we spend equal dollars on each. The amount of face each dollar buys depends on the bond's dirty price, the quote plus accrued interest, which is what a buyer actually pays: a bond at 80 gives $125 of face per $100 spent, a bond at 110 gives about $91. Cheaper bonds therefore contribute more face to the basket, and the proportions are fixed from that day on.

A worked example

Three bonds, $400,000 to each, $1.2M in total. One prerequisite first: face is bought in $1,000 pieces, so each allocation lands on the nearest whole $1,000 of face and the dollars come out a few hundred short of exactly equal. That is fine, and it is how every basket is built.

Total face is $1,284,000, so the raise mints 12,840 tokens, one per $100 of face; tokens carry 18 decimals, so a holder can own any fraction of one. Each token costs $1,199,250 / 12,840 = $93.40. Each bond's share of the face bought is its face divided by the total: 32.79% for Bond A ($421,000 / $1,284,000), 38.94% for Bond B and 28.27% for Bond C, 100% together. Every token carries those same shares of its $100 of face, so its price is simply the shares times the prices: 0.3279 × 95 + 0.3894 × 80 + 0.2827 × 110 = $93.40. Each name contributes about $31 of that: equal dollars, as designed.

Why the price is a harmonic mean

Notice what the price is not. The simple average of the three prices is 95.00, but the token is worth 93.40. Equal dollars buy more face of a cheap bond than of an expensive one, so the bond at 80 takes the largest share of every token (38.94%) and the bond at 110 the smallest (28.27%), and the token's price leans toward the cheap end. Averaging prices this way, weighted by what equal dollars buy, is what a harmonic mean is. With perfectly equal dollars the token would price at exactly 93.41. Our example lands at 93.40 because face is bought in whole $1,000 pieces, so the three bonds received $399,950, $400,000 and $399,300 rather than exactly $400,000 each, and that last cent is the rounding. The lesson holds at any size: a simple average would overprice every basket, and by more the wider the spread of prices inside it.

Why equal dollar

No single name dominates. Each issuer represents the same share of capital at mint. Equal face would let a bond at 60 soak up far less capital than one at 105, silently concentrating risk wherever prices are high. Equal dollars keeps every credit thesis carrying the same weight, which is how baskets are underwritten.

Clean per-token accounting. Every lifecycle event arrives as dollars per bond. With fixed face proportions, each event converts to a precise dollars-per-token figure identical for every token outstanding, so coupons distribute, supply burns on principal events, and redemptions resolve with pro-rata math and no per-holder edge cases.

Pricing: the bond market's own number, every day

The mint math sets the proportions; the market sets the price from then on. Each constituent is a publicly traded bond with a quoted dealer price. Two pieces make up what a buyer actually pays:

• Clean price: the quoted price of the bond.
• Accrued interest: interest earned since the last coupon date, building day by day on a fixed schedule.

Clean plus accrued is the dirty price, and that is what the oracle carries onchain: for each constituent, the dirty price of its face share, summed into one per-token figure. Both the quote and the accrued interest come from cbonds, a leading fixed-income data provider, and we are working with leading oracle providers to carry them onchain: the provider reads the cbonds prices continuously, checks them, and pushes the per-token price whenever it changes, and at least once every 24 hours regardless, because accrued interest keeps growing over weekends and holidays when nothing trades. On a coupon date the accrued portion resets and the token steps down by exactly the coupon, the way a stock steps down on its ex-dividend date. The full oracle stack, including how the vault share, vBT, price is derived from this feed, is covered in its own piece.

When one bond gaps, the token wears the hit at exactly that bond's face share, and nothing else moves. A basket price is several independent quotes on separate bonds summed at fixed weights, which is why a basket makes the oracle more honest, not less.

This is one of the main reasons Bondi tokenizes public credit rather than private. There is no modeled net asset value, no mark that only gets tested when a liquidation tries to clear. The names in a basket are quoted daily by the market itself, and the oracle carries those quotes onchain, unchanged.

Lifecycle: a full bond, quirks included

Bondi's goal is bonds as full DeFi primitives, not a smoothed-over yield number. A Bond Token keeps every mechanic of the bonds behind it, and the Reinvestment Vault, covered below, is the abstraction that absorbs all of them for anyone who would rather not handle them. Two things stay constant through every event: one token is always $100 of face, and it is always priced the way the rest of the bond market prices a bond, per $100 of face. When principal comes back early, it is the token supply that shrinks, not the token.

• Coupons are distributed to holders by snapshot on each bond's own calendar, in stablecoin to KYC'd holders and as a transferable Coupon Token to everyone else. A Bond Token sitting inside a liquidity pool position still has a holder behind it: Bondi's backend reconstructs each provider's balance from the pool's positions at the snapshot block and includes them in the distribution.

• Calls and amortizations. When an issuer calls a bond, in part or in full, or an amortizing bond returns a slice of principal on schedule, the contracts handle both the same way: transfers pause, the affected supply is burned, and the proceeds are paid per token at the contractual price. The pause exists because supply is being burned, and it is expected to last seconds: Bondi's relayer processes every holder's burn and payout from the Distribution contract in the same pass.

• Constituent maturity. In a basket, when one constituent matures, its principal is paid out the same way and the supply shrinks by that bond's share; the remaining tokens are still $100 of face each, now backed by the surviving names. When the last constituent matures, the token redeems in full.

The two vaults

For holders who would rather not handle any of that, the Reinvestment Vault takes Bond Tokens in and issues a compounding share, the Vault Bond Token (vBT). Every coupon is swapped back into more Bond Tokens through the basket's pool, calls and amortizations are absorbed inside the vault's accounting, and the share's value is continuous where the raw token's price steps. That share is what a lending market prices as collateral, precisely because it is one clean number a market can read without understanding a call schedule.

The Redemption Vault is the exit while the bonds still live in the traditional market. Requests are batched, the underlying bonds are sold through the licensed broker as one block at the market's own price, cash settles a few days later, and Bondi's relayer pays every participant, with self-claim always available. It is the bridge from onchain markets to the far deeper offchain one, it makes a position exitable at any size, and it lets anyone with KYC arbitrage a cheap onchain price against the bonds' own value. Under native onchain issuance that bridge is no longer needed; it is an intermediary step.

Composability: where the token lives

Each basket trades in one onchain pool against stablecoins, held in a tight band around the oracle price. Its vault share can be posted as collateral in lending markets, and because it is a plain ERC-20 with a continuous price, anything else that composes on ERC-20s, yield splitting, tranching, structured products, can be built on it. Every layer built on top exists because the token underneath is a real primitive: a bond that pays, calls, amortizes and matures, with an honest price every day.

The Bondi vision: where this goes

A basket Bond Token is the intermediary step. Today the bundle is assembled at mint and held together at the broker, one token for the whole basket, and it already proves the two layers everything else is built from: the primitive, a Bond Token that is the bond, and the abstraction, a vault share anyone can build on. The vision is those two layers under every bond in the market.

The onchain bond broker

The USD-denominated corporate bond market is about $17 trillion outstanding and trades close to $70 billion a day. Step one is to tokenize it as it is: every bond its own single-name Bond Token, hundreds and then thousands of them, minted by whoever brings the capital, main partners and sophisticated players first, serviced and distributed by Bondi. Bondi is the infrastructure: the token standard that keeps a bond a bond, the vault that turns it into a clean share, the pool that gives it a live price, the redemption path back to the bond market, and the lending markets that take the share as collateral. It does not run a book, pick winners, or stand between a bond and the people who want it.

A new class of asset managers

Launching a fully rebalancing bond ETF in traditional markets needs institutional lots of every bond in inventory, so a diversified ten to twenty bond ETF needs on the order of $100 million before filings, custody and market making. That wall is why the world's bond ETFs are dominated by a handful of mega managers, most of them indexed to the same benchmarks.

With every bond already a single-name Bond Token, the wall disappears. The ETF Vault takes single-name tokens as inputs and issues one token over a basket of the manager's choosing, rebalancing or not, on rules the manager sets, with coupon distribution built in and the ability for any holder to decompose the ETF token back into its constituents at any time, and from there to redemption. The manager is no longer buying $5 million lots of raw bonds. The capital needed to launch a real, diversified, fully rebalancing bond ETF falls by roughly a million times. That is not a cheaper version of the existing product. It is a new class of asset manager: a two-person credit shop with a sharp thesis, a regional specialist, a thematic credit fund, every product the $100 million wall quietly killed before it was born, now spun up on Bondi's rails. The ETF becomes an infrastructure piece Bondi provides, and the asset management happens on top of it.

Where the volume goes

Every rebalance an ETF Vault performs is a trade in the pools of its constituents, both legs. Holding a basket at target weights means selling the outperformers and buying the underperformers as their prices disperse, day after day, and every one of those trades crosses the single-name pools where sophisticated liquidity providers hold the standing depth. The more managers compose on the rails, the more flow the pools carry, and the better the seat of the people who supply them. The system pays its own market makers out of its own activity.

Issuance onchain

And the mission itself is direct issuance: the issuer sells the bond onchain from day one, to the whole world at once, as a Bond Token that behaves exactly like the bonds tokenized today. Every new onchain holder is one more unit of global demand on paper that used to reach a few hundred institutions. Compressed yields for issuers, real access for everyone else, and no bridge back to a traditional market needed, because the bond never left the chain.

The takeaway

One basket Bond Token is $100 of face spread equal-dollar across its bonds at mint. Weights are fixed, cheaper bonds contribute more face, the token prices at the harmonic mean of its constituents, and it is marked daily at dirty prices from real market quotes. It pays what the bonds pay, does what the bonds do, wraps into a compounding share for lending, exits through a real bond sale, and is the intermediary step toward the ETF Vault, the onchain bond broker, and issuance onchain.