Huobi launched the FUD token on February 5th, and it's currently priced at over $50. So what is FUD?
·
What are DebtDAO and FUD?
FUD is not Fear, Uncertainty, or Doubt, as you often hear, but FTX Users' Debt, an FTX debt token issued by DebtDAO. The FTX exchange was mismanaged on November 11, 2022, leaving it with massive debts.
DebtDAO uses decentralized agreements to provide debt liquidity to the debt market and is committed to building the best debt platform with the lowest price in the whole network, with the ultimate purpose of promoting on-chain debt financing and providing funds convenience for lenders and borrowers. FUD is the first token authorized by FTX creditors to be issued by DebtDAO and is a bond token for the highest quality of all FTX debt.
·
FUD release rules
FTX's debt amounts to between $20m and $100m, DebtDAO confirmed through contracts with FTX's bondholders. And the creditor entrusted DebtDAO to sell this debt at a discount, which was divided into several issuance stages:
1. Early bird stage. The first issue of 1FUD=1 USD, the initial issue and circulation of FUD is 20 million.
Early subscribers will have the opportunity to subscribe for FTX debt at a very low price, and will enjoy FTX debt and debt-related airdrop, priority right of information, priority right of compensation and other rights in the future.
2. Airdrop period. After FTX recovers the database or FTX officially confirms the actual debt of the creditor, DebtDAO will issue additional debt according to the actual amount of the debt and issue airdrop to all FUD holders.
For example: If the actual amount of the debt is confirmed to be USD 60 million through FTX database or published debt information, 40 million FUDs will be issued on the basis of the initial 20 million FUDs, and according to the rules of DebtDAO, the user who holds 1 FUD issued in the initial issue will receive 2 additional FUDs by air drop.
3. Payment period. This debt has the highest priority rating of all FTX debts because FTX has far higher collateral than the debt and the collateral cannot be disposed of without the creditor's consent. During the repayment transaction, DebtDAO will help all users holding FUD carry out 1:1 debt repurchases.
·
Advantages of holding and trading FUDs
For creditors, it is understandable that if they do not want to wait for FTX to repay the debt, they can obtain working capital in advance through FUD for other purposes. Similar to collateralized debt obligations, decentralized agreements will be more convenient than traditional finance.
For investors investing in FUD, if FTX's original creditors have urgent capital needs, it is inevitable to sell at a discount. Investors in FUD can obtain FTX debt at a lower price. In addition, FUDs can be traded freely, and there is no liquidity problem; Fair value can also be reflected in price in a timely manner, without affecting short-term investment decisions.
In addition, the risk of debt assets is much lower than that of equity assets. The token value of FUD is backed by FTX debt, which will not return to zero at worst. At FTX's bankruptcy hearing, lawyers said that $5bn of assets had been recovered, suggesting that the chances of the debt being repaid were high and that it was only a matter of time before it entered the US legal process.
·
Information for FUD investors to note
1. The size of FTX's debt. Decide later can obtain several times the airdrop.
2. Repayment time of FTX. Determine the time value of assets and determine the cycle of FUD price return to value.
3. Other possibilities of FTX debt, i.e. other powers other than debt servicing, such as debt-equity swaps.
