Bonds Mechanism
What are HBONDs (Bonds)?
HBONDs are unique tokens that can be utilized to help stabilize HERO price around peg (0.1 USDC) by reducing circulating supply of HERO if the TWAP (time-weighted-average-price) goes below peg (0.1 USDC).
When can I buy HBONDs (Bonds)?
HBONDs can be purchased only on contraction periods, when TWAP of HERO is below 1.
Every new epoch on contraction periods, HBONDs are issued in the amount of 3% of current HERO circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of circulating supply of HERO, no more bonds will be issued.
Where can I buy HBONDs (Bonds)?
You can buy HBONDs if any are available, through the Bond on Hero Financial, anyone can buy as many HBONDs as they want as long as they have enough HERO to pay for them.
There is a limit amount (3% of HERO current circulating supply) of available HBONDs per epoch while on contraction periods, and are sold as first come first serve.
Why should I buy HBONDs (Bonds)?
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, more on that on DAO Fund section.
HBONDs don't have a expiration date, so you can view them as a investment on the protocol, because long term you get benefits from holding bonds.
Incentives for holding HBONDs
The idea is to reward HBONDs buyers for helping the protocol, while also protecting the protocol from being manipulated from big players.
So after you buy HBONDs using HERO, you get 2 possible ways to get your HERO back:
Sell back your HBONDs for HERO while peg is between 1 - 1.1 (0.1 USDC) with no redemption bonus. This to prevent instant dump after peg is recovered
Sell back your HBONDs for HERO while peg is above 1.1 (0.1 USDC) with a bonus redemption rate
When can I swap HBONDs for a bonus?
HBONDs TWAP (time-weighted average price) is based on HERO price TWAP from the previous epoch as it ends. This mean that HERO TWAP is real-time and HBONDs TWAP is not. In other words, you can redeem HBONDs for a bonus when the previous epoch's TWAP > 1.1.
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