Introduce a 15 Epoch Lock Up For xBOND

#1

In order to alleviate much of the concern around xBOND, I believe users should be able to fully unlock their xBOND and claim their USD after an X amount of epochs. For this example, I am using 15 epochs. But this is just a place holder and can be parameter in governance.

By doing this, we allow people to put USD into xBOND during a positive rebase expansion cycle, and know that after an X amount of epochs, they will be able to pull all USD out. As it stands now, someone who mints xBOND during the end of an expansion cycle generally gets left stuck in xBOND waiting for the next expansion cycle so they can cash out their principle.

A downside to this is that there will be a lot of USD hitting the market, but this increase in volatility can also be a good thing as it will allow fresh blood to enter into xbond at 1:1 assuming this increase in USD supply leads to a negative rebase.

Thoughts on having a 15 epoch unlock for xBOND?

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#2

What happens if person mints new xBond, sells or buys xBond? Timer will have to reset?
Because it will be very hard technical task, to make some kind of tracking system, so that every new batch of minted xBond will have its own timer and I don’t think it’s even possible with tradable token.

Maybe we can put timer on “withdra all button”, so that after pressing it user will need to wait some epochs untill he gets USD (like in ESD/DSD) and during this time he doesn’t benefit from rebases.

#3

I agree with this proposal and with the idea of the 15 epochs beginning from the time they withdraw. Not sure though about not giving them the rebases it would sort of defeat the purpose of withdrawing early. I would add maybe instead have it so they have to lock 20% of the value in Share they would like to withdraw into a smart contract.

#4

much of the concern around xBOND

For the clarity of this thread, what are the concerns around xBOND?

It feels antithetical to try to defuse some of the pain points of the xBOND properties since part of what makes the current system stable is definitely (at least in part) due to this lock-up. I think we need to be very careful about this to avoid a run on USDX. Erring on the side of caution would mean to set the number of epochs arbitrarily high to avoid problems (which is still better than the indefinite/asymptotic redemption model currently).

I definitely prefer this to an incentivised xBOND pool.

Current problems that I see with xBOND are that it takes a long run of positive rebases to get anywhere close to redeeming the principle lock-up let alone any additional (from seigniorage). Any negative rebases during a positive run will completely cripple the ability to redeem further and slow the redemption process by an order of magnitude (I went from being able to redeem triple digit xBOND to single digit xBOND amounts). This risk of either never being able to fully redeem or it taking too long to do so is where I see the problem.

Certainly adding an epoch for full redemption can be a solution but I’d hesitate to even start to picture how this will play out.

How about tweaking the % of redeemables during positive rebases? I couldn’t find the code that dictates how much xBOND can be redeemed during a positive cycle. Couldn’t we start there? Increasing this percentage means that people can begin to redeem larger portions of their xBONDs and see the light at the end of this redemption tunnel. This is a minimal change to the system that also will create minimal implications. USDX release back into circulation will remain slow and controlled as opposed to uncontrolled floods (if a bunch of people bond a lot at a certain time, they will all unlock at the same time and flood the market with USDX, NOT a good thing).

An alternative idea would be to use this epoch value but allow slow redemption on a curve over the redemption period of X epochs. Any bonds unredeemed in a positive cycle don’t count towards the curve. This curve can be linear or exponential and be rising or falling. I would suggest a rising exponential curve where bond holders’ first redemption starts the epoch cycle for their full current bond balance. The first redemption is small and exponentially grows towards the end of the redemption period. Any new bonds acquired during a redemption cycle are ignored unless the holder wishes to restart the cycle and include the new bonds. This way full redemption is still guaranteed and we avoid big floods to the market and still maintain the illiquid property of xBOND and USDX by keeping initial redemptions at low values and gradually increasing towards the end of the redemption period.

The exact continuous function used for the redemption period can be discussed here. Exponential (x^2) curves are just a starting point. We could even use cubic root curves (starts slow, accelerates towards the mid term, and plateaus off towards the end).

I would argue that we should aim for gradual and continuous functions for lock-up and release to avoid situations where there can be big market fluctuations based on user activity (negative rebases cause a big mint surge, which all unlock at the same time and flood the market causing big spikes and dips in USDX price). We should follow the rationale behind rebase lag.

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#5

I support a proposal where it’s possible to withdraw all USD at once out of xBond. I like the idea of Dima that the user triggers the start of the countdown. After that moment stake is not part of positive rebase (but of negative?) and user is no longer able to mint, sell or redeem xBond. At the end of the countdown user can withdraw all USD. This step is also necessary before the user will be able to mint xBond again.

One thing which I think is also important in this context: Fees. People who don’t juggle with 5+ figures pay pretty high fees in relation to the redemptions, especially at “low” positive rebases, just to burn eth for about the same value in USDx. And with each “lost” redemption it takes longer to redeem all…

#6

xBOND Rationale: lock up liquidity during negative rebases.
xBOND Method: offer attractive rates to lock up 1USD:1xBOND
xBOND Problem: Users can not get their priciple back in a timely manner
Solution: Increase USD claimable per cycle + offer penalty premiums for additional claims

Technical Solution: Permit users to claim 2x their % xBOND ownership of the Initial Claimable USD. Any additional xBOND redemptions can start at a 30% haircut and increase on an exponential curve that increases as they try to liquidate higher portions. This gives liquidity to any desperate participants, but would go as high as 80% penalty for example. xBOND holders would be disincentivized to redeem too much of their holdings at once, but they should have the opportunity to do so if they need to get out. These penalty fees can be absorbed by the xBOND pool or a separate treasury.

I agree the original proposed solution of 15 epochs would cause major downward sell pressure and fluctuations on USDx. everyone who mints at 1:1 would be getting out at the same time and dumping etc. a penalty curve gives different timelines for this sell pressure and encourages holders to stay in xBOND.

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xBond redemptions
#7

I agree with most of the discussed topics in this post and doing some fine tuning of % xBond redeemables. It would allow smaller investors to still have a decent profit margin (vs gas) and still not overflow the market recently unlocked USDx.

#8

Great ideas. Wanted to add this: https://www.investopedia.com/terms/t/treasurybond.asp

US treasury bonds have 10-30 year maturity dates, while paying periodic interest.

XBonds should NOT wait 10-30 years to mature obviously but I do think some type of maturity date makes sense. xbonds pay seigniorage, which somewhat parallels interest rate payouts for T-Bonds. The seigniorage % is our own interest rate.

Another idea that is also interesting (will make separate post soon) is the introduction of multiple types of bonds with different maturity dates. The way to differentiate the two would be to split the xbond payout in a ratio that favors the longer term lockup.

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#9

We could issue them as an NFT

#10

I think crypt0goldrush has the right idea. The amount claimable is too low atm.

Also, how about something like during the last hour of an epoch of a positive rebase, users can claim even more xBond? The idea being that some users aren’t claiming at all during a positive rebase epoch, so we should let users who want to withdraw take their share.

#11

To improve xbond’s diversity, I think the idea to have multiple types of bonds like short term bond and long term bond with differnt maturity dates and ratio payouts could be interesting idea. This is also quite logical to be understandable. For example, bonds with 15 days maturity is supposed to have higher return than 3 days maturity.

#12

I would argue that the lockup is potentially a feature and not a bug. With USDx staking coming live now (lockup but with recovery of principal), that may be a better option for short term users wishing to get returns on their USDx.

Just ideas…we shall see how the USDx staking works in practice

#13

I think this a very good idea.
As of today (especially people who did small amounts), xbonds are locked an un-used. With dillution, it makes it even harder to withdraw them. Most of small investors, given gas fees, will never be able to withdraw the full amount.

In addition, having the possibility to withdraw all xbonds after x epochs, would push the price of usdx above 1$ everytime as incentive on xbonding will become much stronger.