Bonds Mechanism
Profit from $RBOND and help get $RUBY back to peg
Come to the rescue of RUBY and get it back to peg while making a healthy lucrative profit!
RBonds are sold by the protocol when the RUBY price is under peg of 1 USDC. Bonds can be purchased as “RUBY at a discount” since bonds can be redeemed back to higher RUBY price once it reaches peg. All RUBY used to buy RBOND is burned to help reduce supply. RBOND holders are incentivised to hold their token longer as the reward (in RUBY) increases quadratically with price movements.
What are RBOND (Bonds)?
Bonds are unique tokens that can be utilized to help stabilize RUBY price around peg (1 RUBY = 1 USDC) by reducing circulating supply of RUBY if the TWAP (time-weighted-average-price) goes below peg (1 RUBY = 1 USDC).
When can I buy RBOND (Bonds)?
RBOND can be purchased only on contraction periods, when TWAP of RUBY is below 1.
Every new epoch on contraction periods, RBONDs are issued in the amount of 3% of current RUBY circulating supply, with a max debt amount of 45%. This means that if bonds reach 45% of circulating supply of RUBY, no more bonds will be issued.
To encourage redemption of RBOND for RUBY when RUBY TWAP > 1.02 and incentivize users to redeem at a higher price, RBOND redemption will be more profitable with a higher RUBY TWAP value, of which RBOND to RUBY ratio will be 1:R, where R can be calculated in the formula as shown below:
Where coeff = 0.7
Note: RBOND TWAP (time-weighted average price) is based on RUBY price TWAP from the previous epoch as it ends. This means that RUBY TWAP is real-time and RBOND TWAP is not.
Where can I buy RBOND (Bonds)?
You can buy RBOND if any are available, anyone can buy as many RBONDs as they want as long as they have enough RUBY to pay for them.
There is a limited amount (3% of RUBY current circulating supply) of available RBONDs per epoch while on contraction periods, and are sold as first come first serve.
Why should I buy RBOND (Bonds)?
First and most important reason is Bonds help maintain the peg, but will not be the only measure used to keep the protocol on track. We also have a DAO fund which will step in and buy RUBY to get it back to peg.
RBONDs 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 RBOND
The idea is to reward RBOND buyers for helping the protocol, while also protecting the protocol from being manipulated from big players.
So after you buy RBOND using RUBY, you get 2 possible ways to get your RUBY back:
Sell back your RBOND for RUBY while peg is between 1 - 1.02 (1 RUBY = 1 USDC) with no redemption bonus. This to prevent instant dump after peg is recovered
Sell back your RBOND for RUBY while peg is above 1.02 (1 RUBY = 1 USDC) with a bonus redemption rate
The longer you hold, the more both the protocol and you benefit from RBOND.
Example:
When RUBY = 0.8, burn 1 RUBY to get 1 RBOND (RBOND price = 0.8)
When RUBY = 1.15, redeem 1 RBOND to get 1.105 RUBY (RBOND price = 1.27)
So, which one is better?
If I buy RUBY at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per RUBY
But, if I buy RUBY at 0.8, burn it for RBOND, and redeem it at 1.15, I'm getting 1.105 RUBY* 1.15 (RUBY current price) = 1,271 (+0.47$) per RBOND 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 RUBY and RBOND holders when needed.
Note: For redemption of bonds, there are two requirements: The last hour TWAP is >1.01, and with the "Treasury" at 0x...(TBD) has enough RUBY balance (which is emitted in boardroom when above peg) to support the transactions & exchange of RBOND for RUBY.
The current Treasury RUBY balance will be available on the bonds page at URL.io/bond for better understanding of the amount of bonds which can be redeemed. New RUBY are added to Treasury every epoch (similar to boardroom) so this value will constantly update.
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