Bond Mechanism

CBonds!

What is Cbonds (Bonds)?

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

When can I buy CBonds(Bonds)?

CBond can be purchased only on contraction periods when TWAP of COMET is below 1.

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

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

Where can I buy CBond (Bonds)?

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

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

Why should I buy CBond (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.

CBonds 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 CBond

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

So after you buy CBond using COMET, you get 2 possible ways to get your CBond back:

1. Sell back your CBond for COMET 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 CBond for COMET 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 CBonds.

Example:

1. When COMET= 0.8, burn 1 COMETto get 1.2 CBond (CBond price = 0.8)

2. When COMET= 1.15, redeem 1 CBond to get 1.105 COMET(CBond price = 1.27)

So, which one is better?

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

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

When can I swap CBond for a bonus?

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