1. Smartbond is a currency managed by an automated system, to serve as a store of value for its users.
  2. "I've always been in favor of abolishing the Federal Reserve and substituting a machine program that would keep the quantity of money going up at a steady rate."
    - Milton Friedman (Economics Nobel laureate)
    By implementing monetary policy (particularly on interest rates and the money supply) through deterministic rules, the behaviour of the Smartbond system is clearly specified in all circumstances. These rules embodying sound economic principles are applied automatically, leaving no room for biased judgement or unforeseen outcomes. This also enforces discipline on the system to always follow the rules which users have subscribed to, providing confidence over the long term.
  3. The price floor protection ensures Smartbonds have most of their value fully protected against loss. Secondly, the predetermined supply of Smartbonds built into the system safeguards users against depreciation caused by discretionary money printing. Moreover, the interest distribution guarantee ensures that users are paid 6% interest in aggregate, corresponding to the full growth in the money supply.
  4. Blockchain technology makes it possible to track ownership of money in electronic form in an automated way which requires no external intervention. This decentralised approach, secured by advanced cryptography, removes the need for a monetary system to rely on support from the state.
    Being tied to a particular region and economy gives traditional currencies a user base by default, while also limiting one of the major uses of a currency, namely of facilitating global trade. The use of a currency domestically happens in fact quite independently of how well the monetary system is governed. As a voluntary participation system with predefined rules however, the Smartbond platform is premised on better serving the interests of users.
  5. The Smartbond system guarantees that all growth in the money supply will be paid out as interest to users directly. Given that holding Smartbonds is currently the only way to earn interest on the platform, it pays the full 6% growth rate of the money supply.
    This rate of 6% is set in line with the money supply expansion rates of major economies, the difference being that major currencies currently have a policy of very low interest rates.
  6. For each Smartbond in circulation, an amount of Swiss Francs equal to the price floor is held in cash as a reserve. This will be used to buy back Smartbonds at the price floor in the event of a drop in its market price. Because funds are held at all times to buy back up to all Smartbonds in circulation, the price of Smartbonds cannot go below the price floor.
    The price floor itself started at $0.80 in January 2016 (when the Smartbond price was $1), and is gradually adjusted downwards at a rate of 6% annually. After the re-denomination of reserves into Swiss Franc on 9-Dec-2016, the downward adjustment occurs at a rate of 6.75% annually. The adjustment itself is necessary to account for the differential between the interest earned on Smartbonds and that earned on the reserves.
  7. The number of Smartbonds in existence started at one billion in January 2016, and grows gradually at a rate capped at 6% annually thereafter. This growth of the money supply is hard coded in the system and happens automatically.
    This rate of 6% is set in line with the money supply expansion rates of major economies, aiming for the exchange rate against major currencies to have no bias in the long term.
  8. For general enquiries, please write to contact@smartbond.fund