Bond

What is SOs (Bonds)?

Bonds are unique tokens that can be utilized to help stabilize $IF price around peg (1 FTM) by reducing the circulating supply of IF if the TWAP (time-weighted-average-price) goes below peg (1 FTM).

When can I buy SOs(Bonds)?

$SO can be purchased only on contraction periods when TWAP of $IF is below 1.

Every new epoch on contraction periods, $SOs are issued in the amount of 3% of the current IF circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of the circulating supply of $IF, no more bonds will be issued.

Note: $SOs TWAP (time-weighted average price) is based on $IF's price TWAP from the previous epoch as it ends. This means that IF TWAP is real-time and $SOs TWAP is not.

Where can I buy $SO (Bonds)?

You can buy $SOs if any are available, through xxx. Anyone can buy as many $SOs as they want as long as they have enough IF to pay for them.

There is a limit amount (3% of IF current circulating supply) of available $SOs per epoch while on contraction periods, and are sold as first come first serve.

Why should I buy $SO (Bonds)?

First and most important reason is that bonds help maintain the peg, but will not be the only measure used to keep the protocol on track, more on that in the DAO Fund section here.

$SOs don't have an expiration date, so you can view them as an investment in the protocol because long term you get benefits from holding bonds.

Incentives for holding $SO

The idea is to reward $SO buyers for helping the protocol, while also protecting the protocol from being manipulated by big players.

So after you buy $SO using $IF, you get 2 possible ways to get your $SO back:

1. Sell back your $SO for $IF while peg is between 1 - 1.1 (1 FTM) with no redemption bonus. This is to prevent instant dump after peg is recovered

2. Sell back your $SO for $IF while peg is above 1 FTM with a bonus redemption rate

The longer you hold, the more both the protocol and you benefit from $SO.

Example:

1. When $IF = 0.8, burn 1 $IF to get 1.2 $SO($SO price = 0.8)

2. When $IF = 1.15, redeem 1 $SO to get 1.105 $IF($SO price = 1.27)

So, which one is better?

If I buy $IF at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per $IF

But, if I buy $IF at 0.8, burn it for $SO, and redeem it at 1.15, I'm getting 1.105 $IF* 1.15 ($IF current price) = 1,271 (+0.47$) per $SO 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 $IF and $SO holders when needed.

When can I swap $SO for a bonus?

$SO TWAP (time-weighted average price) is based on $IF price TWAP from the previous epoch as it ends. This means that $IF TWAP is real-time and $SO TWAP is not. In other words, you can redeem $SO for a bonus when the previous epoch's TWAP > 1.1.