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