LP Token Bond System

Bonds are a financial primitive for protocols to acquire assets, including their own liquidity(LP), in exchange for protocol tokens at a discount(10%). In other words, bonds are a pricing mechanism for any two ERC-20 tokens that does not rely on third parties like oracles. Bonds internally respond to supply and demand by offering a variable ROI rate to the market and its users.

Bonds internally respond to supply and demand by offering a variable ROI rate to the market and its users.

How do both the Treasury and the bonder benefit from the process?

Bonds are the primary mechanism for Treasury inflows, and thus, the growth of the network.

Bonders commit a capital sum upfront and are promised a fixed return(+10%) at a set point in time; that return is in 4.0V2 tokens and thus the bonder's profit would depend on token price when the bond matures.

If the ROI is positive – a bond can be purchased at a discount to market price) – market participants (bonders) are incentivized to exchange their assets for the token, vested after a cliff period of 3 days. The Treasury sells tokens at a premium to its backing, while the bonder is able to capture a discount (positive ROI) by purchasing the token directly from the Treasury.

Why Do I Want Bonds?

Because it allows you to buy 4.0V2 tokens at a lower cost basis. In return for selling your LP, the protocol will sell you tokens at a (x)% discount.