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