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