Bonds Mechanism
What are DBOND (Bonds)?
Bonds are unique tokens that can be utilized to help stabilize DANTE price around peg (1 TOMB) by reducing circulating supply of DANTE if the TWAP (time-weighted-average-price) goes below peg (1 TOMB).
When can I buy DBOND (Bonds)?
DBOND can be purchased only on contraction periods, when TWAP of DANTE is below 1.
Every new epoch on contraction periods, DBONDs are issued in the amount of 3% of current DANTE circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of circulating supply of DANTE, no more bonds will be issued.
Note: DBOND TWAP (time-weighted average price) is based on DANTE price TWAP from the previous epoch as it ends. This mean that DANTE TWAP is real-time and DBOND TWAP is not.
Where can I buy DBOND (Bonds)?
You can buy DBONDs if any are available, through the HELL on dantefinance.com, anyone can buy as many DBONDs as they want as long as they have enough DANTE to pay for them.
There is a limit amount (3% of DANTE current circulating supply) of available DBONDs per epoch while on contraction periods, and are sold as first come first serve.
Why should I buy DBOND (Bonds)?
First and most important reason is Bonds help maintain the peg, but will not be the only measure use to keep the protocol on track, more on that on DAO Fund section here.
DBONDs don't have a expiration date, so you can view them as a investment on the protocol, because longterm you get benefits from holding bonds.
Incentives for holding DBOND
The idea is to reward DBOND buyers for helping the protocol, while also protecting the protocol from being manipulated from big players.
So after you buy DBOND using DANTE, you get 2 possible ways to get your DANTE back:
Sell back your DBOND for DANTE while peg is between 1 - 1.1 (1 TOMB) with no redemption bonus. This to prevent instant dump after peg is recovered
Sell back your DBOND for DANTE while peg is above 1.1 (1 TOMB) with a bonus redemption rate
The longer you hold, the more both the protocol and you benefit from Dbonds.
Example:
When DANTE = 0.8, burn 1 DANTE to get 1 DANTE (DBOND price = 0.8)
When DANTE = 1.15, redeem 1 DBOND to get 1.105 DANTE (DBOND price = 1.27)
So, which one is better?
If I buy DANTE at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per DANTE
But, if I buy DANTE at 0.8, burn it for DBOND, and redeem it at 1.15, I'm getting 1.105 DANTE * 1.15 (DANTE current price) = 1,271 (+0.47$) per DBOND redeemed.
But what if getting back to peg is taking too long ?
We are going to adjust our use cases, to have different behaviors on contraction and expansion periods to benefit DANTE and DBOND holders when needed.
When can I swap DBOND for a bonus?
DBOND TWAP (time-weighted average price) is based on DANTE price TWAP from the previous epoch as it ends. This mean that DANTE TWAP is real-time and DBOND TWAP is not. In other words, you can redeem DBOND for a bonus when the previous epoch's TWAP > 1.1.
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