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