October 11, 2022
The LUSD Chicken Bonds release marks the arrival of a brand new type of DeFi protocol deeply intertwined with a generative NFT collection. Chicken Bonds introduce a unique form of bonding, never harnessed before by any other protocol. And lastly, it brings some excitement and fun into the DeFi bear market - it will be an ongoing experimentation packed with learnings.
This article will focus on the NFTs and highlight why they mark a milestone in the evolution of DeFi & NFTs. We have packed a fascinating blend of features into Chicken Bonds NFTs - stretching every boomer's imagination:
Since users can bond any amount of LUSD, at any time, using an NFT is the most efficient way to keep track of their deposits. Thus, the CB NFT started as a purely technical feature.
However, we quickly realized it was a unique opportunity to improve the Chicken Bonds experience by making it more engaging and rewarding: the idea of building a fully fledged generative NFT collection was born.
With this playful component, a new fun challenge arises for users: should they optimize their economic profit from bonding or rather decide in favor of their NFT collections? It will be an explorative journey for every user: will your decisions be driven by rational or emotional factors?
Each LUSD bond is an NFT which contains three different art pieces but only one is visible at the time depending on the user’s bonding state:
The first NFT is a special one, as it is a technical requirement — a necessary part of the protocol that has been given a neat visual element to go with. Having the bonds as an NFT enables users to easily transfer, or re-sell them. Since the Egg NFT is a claim upon the bonded assets, transferring the NFT transfers the underlying assets — the situation is exactly the same as with Uniswap V3 LP NFTs.
The Chicken In and Chicken Out NFTs have no functionality in the Chicken Bonds system and are just a visual memory of your bond and actions. At this stage there are no assets tied to the NFTs anymore.
The art for the Chicken Bonds NFT was made by Luchador, NFT artist and dev, creator of an eponym collection and Play to Earn game: Luchadores. Our team has then iterated on the svg provided to adjust the rarity formulas and attributes allocations to make the experience as engaging as possible.
At Liquity, resilience is a serious concern never overlooked – be it for protocols or NFTs art. The Chicken Bonds NFTs visuals are no different and received the Liquity touch: the art is an SVG, fully onchain. There is no third party hosting or pinning required: the art for your Chicken Bonds NFTs will be available as long as the Ethereum network synchronizes.
Egg NFTs have four basic attributes that are partially inherited when the NFT evolves into a Chicken In and Chicken Out NFT.
The egg is the simplest NFT and it will be displayed while you are bonding. The egg NFT has four attributes and a cute motion element: it wiggles when you wait a bit.
There are a total of 4’056 combinations. The card border and color as well as the egg size carry over when the NFT evolves during a Chicken In or Out. Here is the full list of attributes and their probabilities:
To ensure the eggs are compelling and satisfying, there is an additional rarity ponderation step: the affinity.
Amongst the attributes, some are rarer than others, such as the Gold or Rainbow color variants. To still make the NFT as compelling as possible, we’ve introduced a notion of “affinity”: it makes the allocation of attributes from the same family more likely if you already have one.
Thus, an NFT that rolls a rainbow border (5% base chance) will have better chances at a rainbow card (4% vs the usual 2%). If it rolls the rainbow card too, it will again have better chances than usual to roll a rainbow egg (5% vs the usual 2%).
An interesting consequence of affinity is that it makes rolls from the same family, such as Rainbow Border / Rainbow Card / Rainbow Egg a bit more accessible. Thus, the rarest of all eggs are disparate matching of rare attributes.
For instance, at the egg state, a very rare combination is a Rainbow Border / Gold Card / Luminous egg with a large size:
The egg will be displayed while you are bonding. Once you Chicken In (claim bond) or Chicken Out (cancel bond), you will lose your egg forever. To keep your egg - you need to keep bonding.
Let’s start with the Chicken Out NFT which is the simplest of the two. Indeed, while Chickening In, the NFT inherits these three attributes of the Egg NFT and gains a new one, the Chicken Color:
Тhe Chicken Color is rolled, with 30% odds of being the same color as the egg. In total, there are more than 52k combinations possible.
To keep going with the very special Rainbow Border /Rainbow Background / Luminous Egg (RRL Egg from now on), here is how it would evolve if Chickened Out:
The most interesting evolution of the NFT occurs when a user Chicken In. The Chicken In NFT has these main types of attributes:
Thanks to the additional Chicken In attributes, the amount of possible combinations at this stage skyrockets to more than 31 millions.
These three attributes are the same as for the Chicken Out (see section above):
The chicken color is the most special attribute. You can improve your chances to get a rare color like bronze, silver, gold, rainbow or luminous as follows:
Moreover, when Egg turns into Proud Chickens, they get four new attributes. Each one is rolled randomly to determine which variant is obtained.
To get back again to our RRL Egg, here is how it could look like if Chickened In:
There is an additional series of attributes exclusively available for the Chicken In NFTs. These attributes, unlike the others, are not rolled at random or derived from the bond properties. Instead, they are allocated based on your on-chain activities observed on the wallet minting the bond:
The Liquity trove (1) also provides a rarity amplification factor, providing better odds at rare colors (Bronze to Luminous) depending on the trove size. Staking LQTY and gauge voting provides additional attributes visible at the bottom of the card.
Chicken In additional attributes are determined at the moment the users Chicken In. Thus, the conditions necessary to obtain the special attributes need to be fulfilled before this point for the attributes to be obtained.
Note: Only Troves created directly by the wallet are accounted for, which excludes Troves created with tools like DeFiSaver (DSProxy). However, DeFiSaver is working on integrating Chicken Bonds, stay tuned.
All Chicken Bonds NFT are transferable, and can be traded on the usual NFT exchanges, with a 0% creator fee.
⚠️ If you are selling an Egg, keep in mind that it contains the claim on the underlying LUSD, recoverable by Chickening Out. Make sure to price your Egg accordingly.
LUSD Chicken Bonds can be listed on X2Y2 or LooksRare with fees of 0.5% and 2%.
Just like bLUSD, the yield-amplified LUSD-backed ERC20 token produced by the Chicken Bonds would make for an exciting collateral across DeFi, the Egg NFT has interesting properties in that regard too.
Indeed, since the Egg NFT (bonding phase) contains the claim upon the assets, it would be a prime NFT to use as collateral. If a liquidation was ever required, the lending service could simply seize the NFT, chicken out to recover the LUSD, and compensate the user debt. With Egg NFTs as collateral, bond holders will be able to leverage bonds, enabling even more refined strategies.
LUSD Chicken Bonds are an exciting new primitive at the crossroads of DeFi and NFT. We are looking forward to see how the experiment will keep unfolding and to see what kind of integrations could be built on top.