Frequently Asked Questions
Welcome to the Bluejay Finance FAQs page! The following page is designed to answer the most common questions about Bluejay Finance, but if you need more information or have further questions, we encourage you to join our community on Discord. Our team and community members will be happy to help you out.
Similar to how there are no supply cap to company’s share, there is no limit to the supply of BLU. This allows the protocol to perform recapitalisation when necessary to raise funds for future expansions or perform buyback when growth targets are met.
The team is focused on delivering the best suite of products to provide access to financial services, the same way that companies in the real world are focused on value creation for their customers instead of just their share prices.
Bluejay is similar to an early startup and investing in the governance token is highly speculative. While the team has deep appreciation for early supporters for the protocol, we do not want to draw excessive attention to simply trading BLU or inventing schemes that manipulates the prices of BLU in unsustainable manners.
Here are the key reasons why we are deployed on Ethereum:
- Ethereum has the highest amount of liquidity across all L1s and L2s. Liquidity is important in the early stages of the protocol.
- One of the strongest security layers which both users and the protocol can benefit from.
If the market demonstrates demand for Earn, we will be deploying it on the relevant layers.
The staking yields are on the BLU token right now, not on bluSGD. They are at this level because they reflect the growth projection of the protocol, and also help reward earlier users.
bluStables does not have a staking yield. Instead, holders of bluStables may earn yield on the stablecoins by investing them in deals on the Bluejay Earn page.
Bluejay launched a public sale to bootstrap its liquidity in November 2022. Whitelist price was set at $5 while the public sale price was $10.
The core team has separately raised money to fund software development efforts.
Information about funds raised, BLU token, token generation events can be read in the following articles:
The protocol is capital efficient in a sense that it does not always rely on external funding to operate and grow.
The protocol makes revenue from both arbitrage and swap fees. This mechanism allows the protocol to utilize its revenue generated to operate and grow. You can check out this article for more information here.
Stablecoin holders are able to participate in exclusive Bluejay Earn products. Loan pools denominated in bluStables do not incur any fees so all the yield from the borrowers goes directly to the bluStables holders.
We aim to be a sustainable business, which is why we have a focus on real world finance / RWA use cases.
But we also like the protocol-owned liquidity approach of certain protocols because they allow them to be more flexible at deploying capital, rather than relying on liquidity mining incentives.
The failure of OHM and Wonderland came from highly inflationary tokenomics and no meaningful deployment of that capital into revenue-generating businesses, similar to a startup that raises series A in capital and then doesn't spend that money at all in its core business.
Bluejay reworks the model by ensuring that we have a sound business model by providing products that create values for our users and then extracting the value in a sustainable manner.
To quickly understand the similarities and differences between Bluejay Finance and some of the more familiar protocols, please refer to our Protocol Comparison.
BLU tokens are available to be traded on Uniswap V2. The pool was deployed by the protocol during the token generation event, during which 50k of liquidity was deployed by the protocol to facilitate trading in the secondary market.
The decision to deploy that level of liquidity is so that the rest of the capital can be used meaningfully by the product instead of facilitating speculative trading which does not create value for the ecosystem in the long term.
You should buy BLU if you:
- Believe in the mission of Bluejay, or
- Believe that the team’s capability in executing our vision, or
- Believe in the business model of Bluejay, or
- Are speculating that the price will go up, for any other reasons
As BLU is a speculative asset, we do not actively encourage users who do not understand what they are getting into to participate in speculative activities.
If you are unable to understand the risk associated with purchase of BLU, we strongly discourage you from doing so.
The likely answer is: “We do not know”.
There are many reasons why there are increased market activities surrounding the BLU price, including but not exclusive to:
- Speculative trade from individuals or groups of individuals,
- Effects of a large buy or sell orders from individuals or earlier BLU token holders,
The team has not, and will not ever be, guaranteeing a directional price movement or redemption price of the BLU token.
The staking reward comes from the growth of our treasury value.
Governance token holders will participate in deciding the level of staking reward to redistribute the revenue.
The reward rate for BLU is determined by the monetary policy set by the DAO. The level is dependent on the proceed from the bond sale, fees collected from the liquidity pool on the various stablecoins as well as the projected runway for sustaining the reward rate.
The initial staking rate will be set to 35% APY until further action initiated by the DAO.
All the bonds you've purchased will appear in the bonds section where you can redeem BLU from.
You may choose to redeem many bonds at the same time by clicking on the redemption buttons on the top left or redeem individual bonds by clicking on the redemption buttons next to each bond.
You may choose to redeem them as BLU or have the protocol stake it for you and receive sBLU instead.
The principle and maturity value of the bond will be updated to reflect the vesting schedule of the remaining BLU.
Once you have redeemed a partially vested bond, you will receive the amount of BLU that has been vested and the principal value will be reduced by that amount.
Similarly, the maturity period will be reduced by the time elapsed since the bond was purchased, or last redeemed, to reflect the remaining time for the bond to fully vest.
Bonding is a process to allow Bluejay to acquire its own liquidity and reserve assets (ie DAI) and bring stablecoins to the peg by selling BLU at a discount.
You may buy BLU bonds if you want to trade assets you have to get BLU tokens at the discounted price after the vesting period.
Do note that since as you are effectively purchasing the BLU tokens, you are exposed to the volatility of the BLU token price. Please read section on “Why should I buy BLU” and “Why is BLU price going up/down?”
The maturity period for stabilizing bonds is 6 hours, while the maturity period for treasury bonds is 7 days. BLU tokens will be available for redemption throughout the entire maturity period, but only up to the proportion that has been vested.
The maturity period for both types of bonds are determined by the monetary policy set by the decentralized autonomous organization (DAO).
Will we be launching other bonds in the future? What are the types of bonds you could purchase today?
Bluejay do not have intention to launch other bonds as of today.
There are two main types of bonds on Bluejay, treasury bonds, and stabilizing bonds. The only difference is that treasury bonds raise assets for the treasury directly while stabilizing bonds help to peg issued stablecoins to their prices.
You should purchase the bond if the effective price of BLU is suitable for you. Do take note that the market price of BLU may change during the maturity period of the bonds when purchasing it
You should hold the LP tokens if you believe the fees generated from your stake in the liquidity pool will meet your expected returns.
If you do not understand the risk associated with such activities, you are discouraged from participating.
The pBLU token is distributed to early supporters of the protocol when we were fundraising to build Bluejay. It is vested linearly to the supply of BLU tokens.
Information about the token can be found here. Since pBLU is non-transferable, unless you have supported the project since as early as 2021, it is unlikely you can access pBLU.
Early backers who participated in Bluejay Finance’s token generation in November 2021 on Polygon will find an additional link on the sidebar when logging in with the wallet that has participated.
Redemption of pBLU tokens can be made from that page.
Projects and companies require significant capital to materialize their vision and this happens when they are fundraising. Early investors undertake large amount of risk to support a vision early on and are compensated in either shares or tokens which can easily become worthless if the team fails to execute.
In hindsight, it is often easy to comment that investors are dumping on you and that they have gotten in early to the deal. However, it is not easy to make that decision to deploy capital when the project is less mature.
In similar manners, you will be able to invest in the Bluejay ecosystem and our vision at the current price of BLU tokens, and exit at a premium if we are able to execute on our vision down the road.
You do not need to be a BLU holders in order to enjoy benefits of Bluejay’s ecosystem. As a non-BLU token holder, you will still be able to get access to the entire range of products we offer, including Bluejay Earn.
Each $bluSGD is backed by $DAI and $XSGD in the treasury.
You may refer to the amount of assets held in the treasury against the outstanding bluSGD supply.
As it stands on 16 Mar 2023, the protocol has the following assets against 732k of bluSGD as liabilities:
- 443,195 DAI tokens (305k via LP tokens)
- 180,110 xSGD tokens
- 497,707 bluSGD tokens (411k via LP tokens)
This effectively means that for each bluSGD in circulation, the protocol holds:
- 0.769 xSGD
- 1.89 DAI
At the market price, the collateral ratio of bluSGD token is 3.32x
In addition, the team has performed defensive maneuvers to defend the price from secondary effects.
Was there any impact on bluSGD's performance during the extreme market volatility that happened during USDC crisis?
Despite high volatility in the market, bluSGD retained an excellent correlation with SGD throughout the period.
The treasury is currently comprised of DAI, xSGD, and Liquidity Pool tokens. Note, that we do not count Bluejay Finance issued tokens as part of the treasury for collateral purposes. Core concept of collateralization is available here.
Collaterals included in the treasury are selected based on their security and stability.
To guard against fluctuations in value, even large fluctuations, bluStables are overcollateralized to ensure they remain fully backed.
We also select different assets, such as DAI and xSGD to back bluSGD, to avoid correlations. This means that either assets can vary significantly in value and bluSGD holders can still be protected from their volatility.
As the protocol maintains excess collaterals in uncorrelated assets, the protocol will still be able to operate even if the value of collateral changes in a short period of time.
However, the protocol can run into the risk of being insolvent in the short term when value of assets fall below certain levels. The team remains committed to avoid such events by monitoring the market condition and executing our contingency plans in scenarios of extreme volatility.
There was a negligible impact on the treasury as the team act to provide additional liquidity during the volatile period.
We are starting to build out use cases for our bluStables. Bluejay Earn is the first iteration of that ecosystem. It allows holders of bluSGD to earn yield on their bluSGD by investing in fixed-income products.
The protocol is exploring sustainable means for users of bluStables to benefit from. Such request could be discussed and executed from the DAO.
How does bluSGD differ from SGD? How does it differ from xSGD? Why would I hold bluSGD instead of xSGD?
bluSGD is a digital token that is pegged to the Singapore dollar (SGD) on a 1:1 basis. It is an ERC-20 token that runs on the Ethereum blockchain, which means that it can be used in the same way as any other ERC-20 token.
xSGD is another stablecoin offered by Xfers Pte Ltd that is pegged to the Singapore Dollar and has facilities for fiat redemption.
While both tokens attempt to track SGD, there are differences such as:
- xSGD can be redeemed and minted directly via on/off ramps provided by the issuer while bluSGD does not have similar facilities
- bluSGD is a decentralized stablecoin that can be more resilient to the regulatory changes (ie banking crisis)
- The tracking error for both coins are different. You may read a case study of the difference in performance in both coins during the USDC crisis here .
- bluSGD exists in the same ecosystem as Earn and pools using bluStables enjoy a fee waiver. See the core concepts about fees here.
What kind of use cases are currently available today with bluSGD? What are the integrations available?
bluSGD users gets exclusive and fee-less access to investment opportunities offered in the Bluejay Earn marketplace.
In addition, holders can diversify exposure from existing USD assets held on chain or use it to transfer larger amount of value around.
Here’s the suggested read about the framework on stablecoins by MAS. https://www.moodysanalytics.com/regulatory-news/dec-12-22-mas-consults-on-framework-for-stablecoin-related-activities
Each $bluSGD is backed by the treasury that is currently comprised of DAI, xSGD, and Liquidity Pool tokens.
We do not reinvest assets to other protocol so that our stablecoins are backed by low-risk assets and that we can maintain the highest level of liquidity for our users.
The protocol maintains that we do not risk customer assets for short term gains, you may read about the risk of doing so here.
There are two ways to swap to bluSGD: through Uniswap or the PSM module. The most effective route depends on the prevailing market conditions as well as the type of assets you have. As a rule of thumb, we suggest:
If you have access to Singapore bank accounts, we recommend you to on-ramp with xSGD and swap the asset using our xSGD ←→ bluSGD swap.
If you already have xSGD, we recommend you swap the asset using our xSGD ←→ bluSGD swap.
If you already have digital assets like ETH, USDC, USDT or DAI, we recommend you swap the assets using Uniswap. For much larger trade, you may consider using limit order exchange like CowSwap or 1Inch.
What is the reason for having non-USD stablecoins like bluSGD when there are already so many USD-pegged stablecoins in the market?
Real world business transacts in many currencies other than USD. Having digital representation of the different currencies allow businesses and individuals to trade in currencies they are familiar in.
One example is that a business in Philippines who is sending invoice and receiving payment in PHP will not want to send payments in USD or borrow funds in USD due to extra foreign exchange exposure. The existence of digital PHP will allow such business to have simpler business operations and can create opportunities for foreign exchange (FX) and FX derivative markets on-chain.
In extreme market volatility scenarios, what is the risk exposure for bluSGD in loan pools that are funded?
bluSGD ability to track SGD remains the top priority of the protocol. The protocol will continue to ensure that we hold good quality collaterals against issued stablecoins, providing liquidity to trade them and be on top of crises that can potentially threaten its stability.
In addition, once a loan pool is funded and the funds are drawn down, the borrowers would be off-ramping the stablecoins into fiat to deploy them for productive usage. During this time, the risk exposure to bluSGD is minimized.
The platform makes no guarantees on the security of the funds and is provided as-is.
Products on the platform are offered from the borrowers directly and Bluejay does not make guarantees on the accuracy of information nor on the deal itself.
Lenders are encouraged to perform due diligence on the borrower with information provided to ensure they understand the risk involved.
While we make the best attempt to eliminate platform risk and ensuring that the platform operates in predictable manner by undergoing code audit for major releases, we make no guarantees on the products.
As Bluejay neither operates fiat to crypto on/off ramp facilities nor transacts directly with the consumers, we have limited regulatory exposure than traditional exchange.
The team works with legal consultants to ensure we can comply with regulations set forth by the authorities and to remain abreast of changes.
Offers on the Bluejay Earn platform are not directly offered by the protocol but rather by individual businesses or FinTechs themselves. These entities are solely responsible to ensure that they are compliant to local regulatory requirements and investors are responsible to ensure that they can participate in the individual deals.
The team has plans to provide tools to borrowers who may require more stringent requirements on the lenders in the future to help our borrowers stay compliant to their local regulatory requirements.
We are only acting as the marketplace between lenders and borrowers. As we operate a decentralized platform, borrowers and investors are ultimately responsible for their own participation.
Investors should perform their own due diligence on whether they want to lend to a loan pool. Borrowers are strongly encouraged to provide as much info as they can to have a higher success rate of funding and to ensure their deal is competitive.
There will be different types of loans that the borrower can propose and each type of loan carries a different type of risk involved. Some are bonds, some are collateralized loans, it really depends on the borrower's needs and capabilities when creating a loan pool.
Each deal may have a dataroom where more sensitive information may be provided by the borrowers themselves for the investors’ due diligence.
Information on the deal page are provided by the borrowers and are presented as is. Bluejay does not provide any warranties or insurance against accuracies of information or subsequent repayment of loans.
We plan on working with larger partners that are doing loan origination, so when we onboard a partner, they onboard potentially dozens of active deals. This works in favour of lenders as the risk is being spread out across multiple individual loans.
The team also plans to make the process of creating decentralised loan pools much easier for all so that anyone will be able to raise funds for their needs.
Defaults can exist in many forms. In strict terms, a loan can be in the default status even if they are one day late in interest payments. In many cases, even a defaulted loan can eventually be repaid in full with additional interest or be restructured in a way that benefits both borrowers and lenders.
Every deal on the platform are different and have different risk profiles. You may use these guidelines to help you better assess the risk associated with each deal:
- A short term loan is usually less risky than a long term loan
- An entity that has good credit score is usually less risky than another that has worse score
- An entity that has history of low or zero defaults is less risky than another without such history or have poor history of returning funds
- A deal with lower interest rate is likely to be less risky (these entities likely have access to other low interest rate loans as well)
- A structured product with many different loans is less risky than a loan to a single entity
However, lending can be a risky investment and may not be suitable for everyone. You are discouraged from participating if you are unable to assess the risk.
Borrowers are free to raise capital in any assets. However, they do not need to pay a fee if the pool is denominated in bluStables. The fee schedule can be found here.
Lenders will have to deposit the requested assets by the borrower or search for another pool which meets their requirements.
Bluejay’s role in Earn is as a facilitator, or a marketplace between investors and borrowers.
Borrowers and investors are directly responsible to one another.
Investors should perform due diligence on whether they want to lend to a loan pool given the information provided by borrowers. If they are uncomfortable with the risk or are unable to assess the risk involved, they are discouraged from participating.
Borrowers are strongly encouraged to provide as much info, and offer competitive returns, so that they can attract more funds to their deals.
In the event of a delinquency (ie borrower is behind on payments), borrowers will be charged late fees on their loan. The late fee is imposed on top of the regular interest payment and are specified in the loan terms when the pool is created initially. Once the borrower gets back on schedule, additional fees are no longer being imposed.
In such cases, lenders will be receiving additional interest on their loans but may have a different repayment schedule than what was originally planned for.
In other kinds of default, the borrower may request to restructure the deal with the lenders. Bluejay may act as mediators in such scenarios to help both parties reach a favourable outcome.
It is important that the lenders perform due diligence to understand what type of recourse, is available to the lenders in events of default.
The initial pools available on the platform has their identity verified by Bluejay. You may access more information about the identity of the borrowers in the Dataroom. The Dataroom provides detailed information about the borrowers, which can help you verify their identity. However, to access the Dataroom, you may need to sign a non-disclosure agreement (NDA) depending on the requirements of the borrower.
There are many risk associated in investing, some of the risk involves, but not exclusive to:
- Platform risk
- Counter-party risk
- Business risk
- Interest rate risk
If you are unable to assess the risk involved, you are discouraged from participating in the investment.
How is Bluejay Earn providing access to financial instruments that was previously only available to accredited investors? What is the regulatory framework there?
The platform works to fractionalize existing financial products that are being offered by FinTechs. By grouping the investments together, it can reduce the operational overheads of the FinTech if they have otherwise decided to receive many smaller deposits.
Borrowers are responsible to ensure they are compliant to frameworks or regulatory requirements when they are offering products on the platform.
What happened if there is a default? is it 100% loss or is there insurance in place to get some % of recovery?
As legitimate borrowers receive heavy penalties on defaults, and can severely impair their ability to receive financing on Bluejay Earn or from any other financial institutions, a default often only happens as a last resort, and even so, the deal are often restructured with a different repayment plan.
Recourse mechanism differs from deal to deal and varies from borrower to borrowers It is therefore important to lend to credit worthy borrowers who has ability to repay. Investors are encouraged to perform due diligence on what mechanisms are available to them as well as the credit worthiness of the borrower when choosing to participate in a deal.