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BTC-Bond (Upcoming, see principal protected note)

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Last updated 1 month ago

BTC-Bond: The First Principal-Protected Note

BTC-Bond is the flagship structured product in Nexlabs’ Principal-Protected Note (PPN) range, serving as a proof of concept for on-chain fixed-income instruments with capital preservation. This product enables investors to gain Bitcoin exposure while ensuring that their initial principal remains fully protected over a five-year term.

How BTC-Bond Works

BTC-Bond leverages tokenized real-world assets (RWAs), specifically the iShares Treasury Bond 0-1yr UCITS ETF (IB01), which currently offers a 5.2%* non-compounded annual yield. By integrating Backed.fi's tokenized bond ETF (bIB01), we provide on-chain access to this traditional financial instrument, ensuring capital protection while still allowing for BTC upside potential.

To achieve full principal protection over five years, BTC-Bond is structured as follows:

  • 77.6% of the investment is allocated to bIB01, ensuring that with a 5.2% yield, the principal amount grows back to 100% at the end of the term.

  • 22.4% of the investment is allocated to Bitcoin (BTC), offering exposure to BTC price appreciation without jeopardizing the original capital.

At the end of the 5-year term:

  • The bIB01 allocation matures to cover 100% of the initial principal, ensuring full capital protection.

  • The BTC allocation provides potential upside, depending on Bitcoin’s performance over the investment period.

  • Users can: roll forward the investment, receive directly tokens or trade the tokens for a token of their choice (for example cashout by converting to USDC).

Key Benefits of BTC-Bond

✅ Full Principal Protection – Investors are guaranteed the return of their original investment after five years, backed by short-term U.S. Treasury bonds.** ✅ BTC Upside Potential – While the capital is protected, BTC-Bond allows for participation in Bitcoin’s growth. ✅ Tokenized RWA Integration – Utilizing bIB01 from Backed.fi, BTC-Bond ensures exposure to regulated, high-quality financial assets. ✅ Ethereum-Based & DeFi-Compatible – Fully on-chain and deployed on Arbitrum, enabling efficient, low-cost transactions. ✅ Composability & Liquidity – BTC-Bond can be traded, collateralized, or integrated into DeFi protocols, bringing TradFi-grade instruments to Web3.

Important Considerations

  • Investor Eligibility: BTC-Bond is restricted to professional investors outside the U.S. (U.S. persons are not eligible to participate).

  • Mint/Burn Fee: A 0.5% fee applies from the RWA-provider when minting or redeeming BTC-Bond, covering operational costs and maintaining product efficiency. However, token transfers are free of charge, Nexlabs will offer liquidity pools via Uniswap to provide this service.

BTC-Bond as the Foundation of Nexlabs' PPN Framework

BTC-Bond is the first of many structured investment products in Nexlabs’ Principal-Protected Note (PPN) module, paving the way for yield-enhanced, capital-preserving financial instruments. By merging traditional finance with DeFi, BTC-Bond offers an institutional-grade, risk-managed solution for investors seeking stable, long-term exposure to digital assets.

🚀 BTC-Bond represents the first fully on-chain principal-protected structured note, setting a new standard for DeFi-powered investment products. *as of 18-03-2025 **excluding fees