Bonds Mechanism
What are GBOND (Bonds)?
Bonds are unique tokens that can be utilized to help stabilize GAUR price around peg (1 ETH) by reducing circulating supply of GAUR if the TWAP (time-weighted-average-price) goes below peg (1 ETH).
When can I buy GBOND (Bonds)?
GBOND can be purchased only on contraction periods, when TWAP of GAUR is below 1.
Every new epoch on contraction periods, GBONDs are issued in the amount of 3% of current GAUR circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of circulating supply of GAUR, no more bonds will be issued.
Note: GBOND TWAP (time-weighted average price) is based on GAUR's price TWAP from the previous epoch as it ends. This means that GAUR TWAP is real-time and GBOND TWAP is not.
Where can I buy GBOND (Bonds)?
You can buy GBONDs if any are available, through the Bonding section on Gaur.Money, anyone can buy as many GBONDs as they want as long as they have enough GAUR to pay for them.
There is a limit amount (3% of GAUR current circulating supply) of available GBONDs per epoch while on contraction periods, and are sold as first come first serve.
Why should I buy GBOND (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.
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.
Incentives for holding GBOND
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 GAUR, you get 2 possible ways to get your GAUR back:
Sell back your GBOND for GAUR while peg is between 1 - 1.1 (1 ETH) with no redemption bonus. This to prevent instant dump after peg is recovered
Sell back your GBOND for GAUR while peg is above 1.1 (1 ETH) with a bonus redemption rate
The longer you hold, the more both the protocol and you benefit from GBonds.
Example:
When GAUR = 0.8, burn 1 GAUR to get 1 GBOND (GBOND price = 0.8)
When GAUR = 1.15, redeem 1 GBOND to get 1.105 GAUR (GBOND price = 1.27)
So, which one is better?
If I buy GAUR at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per GAUR
But, if I buy GAUR at 0.8, burn it for GBOND, and redeem it at 1.15, I'm getting 1.105 GAUR * 1.15 (GAUR current price) = 1,271 (+0.47$) per GBOND redeemed.
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 GAUR and GBOND holders when needed.
When can I swap GBOND for a bonus?
GBOND TWAP is based on GAUR price TWAP from the previous epoch as it ends. This means that GAUR's TWAP is real-time and GBOND's TWAP is not. In other words, you can redeem GBOND for a bonus when the previous epoch's TWAP > 1.1.
Last updated