BOND MECHANISM

WHAT ARE GBONDS (Bonds)? Bonds are unique tokens that can be utilised to help stabilize GEM price around peg (4,000 GEM = 1 ETH) by reducing the circulating supply of GEM if the TWAP (time-weighted-average-price) goes below peg (4,000 GEM = 1 ETH). WHEN CAN I BUY GBONDS (Bonds)? GBOND can be purchased only on contraction periods when TWAP of GEM's below 1. Every new epoch on contraction periods, GBONDs are issued in the amount of 3% of the current GEM circulating supply, with a max debt amount of 45%. This means that if bonds reach 45% of the circulating supply of GEM, no more bonds will be issued. Note: GBOND TWAP (time-weighted average price) is based on GEM price TWAP from the previous epoch as it ends. This means that GEM TWAP is real-time and GBOND TWAP is not. WHERE CAN I BUY GBONDS (Bonds)? You can buy GBONDs if any are available, through GEMSTONE FINANCE, anyone can buy as many GBONDs as they want as long as they have enough GEM to pay for them. There is a limit amount (3% of GEM's current circulating supply) of available GBONDs per epoch while on contraction periods, and are sold as first come first serve. WHY SHOULD I BUY GBONDS (Bonds)? The 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. We also have a DAO fund that will step in and buy GEM to get it back to peg. GBONDs don't have an expiration date, so you can view them as an investment on the protocol because in the long term 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 by big players. So after you buy GBOND using GEM, you get 2 possible ways to get your GEM back: Sell back your GBOND for GEM while peg is between 1 - 1.1 (4,000 ETH = 1 WETH) with no redemption bonus. This is to prevent instant dump after peg is recovered Sell back your GBOND for GEM while peg is above 1.1 (4,000GEM = 1WETH) with a bonus redemption rate The longer you hold, the more both the protocol and you benefit from GBOND. Example: When GEM = 0.8, burn 1 GEM to get 1 GBOND (GBOND price = 0.8) When GEM = 1.15, redeem 1 GBOND to get 1.105 GEM (GBOND price = 1.27) So, which one is better? If I buy GEM at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per GEM But, if I buy GEM at 0.8, burn it for GBOND, and redeem it at 1.15, I'm getting 1.105 GEM * 1.15 (GEM 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 behaviours on contraction and expansion periods to benefit GEM and GBOND holders when needed. WHEN CAN I SWAP GBOND FOR A BONUS? GBOND TWAP (time-weighted average price) is based on GEM price TWAP from the previous epoch as it ends. This means that GEM 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.

Last updated