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