Pod Flow
Last updated
Last updated
Each pod position, including the A, B, and Z-tranches, holds the rights to the corresponding number of underlying pods upon redemption of the bond. It's important to note that the user who purchased those tranches via the auction market is the one who owns those rights. This is shown in the following diagram:
As each pod moves along the podline and closer to harvest, it theoretically become more valuable. At maturity, this means that the buyer of both the A and B tranches will receive a proportional amount of pod value based on two factors:
Podline progression (i.e. how much closer the pods are to becoming harvestable)
What discount they bought them for off the Auction Market
It is possible that although the pod holder who chooses to tranche and sell their pods, will end up with a greater overall value at the end of the bond contract than when they started, even though they have less pods.
Value is created for buyers who receive discounted pods at a higher rate than they could likely purchase on the open market. The seller receives a portion of liquidity on their debt assets while maintaining a portion of exposure.
*Tranching in this manner involves Bean price risk for the user at the end of the bond period.
