[Proposal] Third Token Addition (BOND)

Proposal to add a third token called the Bond token.

The bond token will effectively be a temporary share token. Let me explain.

When the price of USD < $0.95, any user can buy a bond token using USD (burn USD for BOND).

The price of Bond will be USD ^ 2, so if USD is $0.90, then BOND will be $0.81.

When there is a positive rebase, BONDs holders will be given a 1-1 redemption (burn BOND for USD).

Excess seigniorage is distributed to Share token holders.

This effectively limits SHARE dilution while providing an incentive for rebases.

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I like it.

I guess this will stop the requirement of burning USD for discounted SHARE?

this will help share holders. so people can hold onto their shares during negative rebase too. as there is less chance of dilution. so less chance of dumping.

Interesting. How is the code complexity for this type of addition and how long do you think it would take to implement technically?

pretty easy tbh - stuff with shares and dollars was harder. prob could be done in 1.5 weeks.

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So on negative rebase users could either burn usd for discounted share or burn usd for bond?

no the intended action is just to burn usd for bond. shares would only be for expansions and positive rebases / governance

Burning USD for SHARE and getting back more USD (from a USD seller) is a riskless arbitrage.

Burning USD for BOND seems less powerful as you keep exposure to the project and are not buying USD from sellers. Can a low USD price be enough for someone to buy USD for burning them for BOND? USD has almost a x3 upside if the project survive. Unsure going in x4-10 will change much.

The idea is great to avoid getting there again tho.

I agree. I would almost prefer to have both options available. One of the main points of share is to be stewards of the system and a collateral of last resort so to speak. Without a negative consequence it kind of breaks the incentive structure. Having the choice between either allows for multiple strategies. Can you see a downside to having both?

i think the downside would just be that it would be more complicated. that isn’t necessarily a bad thing.

Does this have the same effect as burning $USD to buy $SHARE?

I’m sure there are people who may be willing to put up a Bond USD market to buy and sell into each other. Could also be bond and share

This is interesting concept, it could cause the upside trend of USD (when it happens) to be slowed down. With additional token we might consider even more crazy ideas, like rewarding SHARE holders with BONDS instead of raw USD on positive rebase, but I don’t know if that wouldn’t make SHAREs be less relevant with this token and making SHARE rebase rewards worse. Anyway, BOND is something to consider.

I am trying to understand “keep exposure to the project”. What does it mean? When someone hold USD or SHARE, they are already exposed to the risk of the project because there is no collators?

If USD is low and you have USD, you might convert them to BOND to enjoy the ride up to $1. That doesn’t change USD price.

Burning USD and not buying USD back is useless for the USD peg.

We want either people holding USD to burn them to buy USD from quitters or incentive newcomers to buy USD (or existing USD holder to increase exposure to USD).

Neither burning USD for SHARE or BOND directly changes the USD price. Both just take the USD out of circulation. Are you proposing a different mechanism to accomplish that?

USD burn to SHARE swap to USD (or SHARE swap to USD burn to SHARE) is a riskless arbitrage (so it will be used, I will do it) and add buy pressure on USD-ETH that define (mainly) the price of USD .

I don’t see how BOND help with that.

edit: Truth is, I don’t see how the USD-SHARE pool influence USD price. There is no ETH there. Not sure it does something to USD price at all.

Exactly. Thank you for clarifying.

I’m not sure if the marginal utility vs the marginal risk/complexity is there for this proposal. This project probably doesn’t need more complexity in the code and tokenomics in its immediate future given its recent history.