Global cryptocurrencies are unbacked and have high transaction cost incurred by global consensus. In contrast, grassroots cryptocurrencies are backed by the goods and services of their issuers -- any person, natural or legal -- and have no transaction cost beyond operating a smartphone. Liquidity in grassroots cryptocurrencies arises from mutual credit via coin exchange among issuers. However, as grassroots coins are redeemable 1-for-1 against any other grassroots coin, the credit-forming exchange must also be 1-for-1, lest prompt redemption after exchange would leave the parties with undue profit or loss. Thus, grassroots coins are incongruent with liquidity through interest-bearing credit.
Here we introduce grassroots bonds, which extend grassroots coins with a maturity date, reframing grassroots coins -- cash -- as mature grassroots bonds. Bond redemption generalises coin redemption, allowing the lending of liquid coins in exchange for interest-bearing future-maturity bonds. We show that digital social contracts -- voluntary agreements among persons, specified, fulfilled, and enforced digitally -- can express the full gamut of financial instruments as the voluntary swap of grassroots bonds, including credit lines, loans, sale of debt, forward contracts, options, and escrow-based instruments, and that classical liquidity ratios are applicable just as well to grassroots bonds. Grassroots bonds may thus allow local digital economies to form and grow without initial capital or external credit, harnessing mutual trust within communities into liquidity.
The formal specification presented here was used by AI to derive a working implementation of grassroots bonds in GLP, a concurrent logic programming language implemented in Dart for smartphone deployment. The implementation is illustrated by a running multiagent village market scenario, also implemented in GLP by AI.