Why xBond pool is a bad idea

Myself and few others worry that xbond pool may bring back the death spiral problem, where xbond gets dumped on market before a negative rebase. so xbond may end up trading lower than the $ value of USD Token. if this happens then there will not be any incentive to buy USD to mint xbond during negative rebase. also dont forget that USD token gets debased during negative rebase. with almost no incentive to mint xbond people may just choose to dump USD on market to stay safe from debase.

there will be a race to the bottom. this means the lower the $ value of USD token goes the lower the value of xbond will follow.

on the other hand look at ESD. ESD coupon is not tradable, that makes sure it can not be dumped during negative rebase and they let you redeem it during positive rebase. but xbond is not fully redeemable here. the difference is that ESD coupon expires and does not get rebase rewards but xbond does not expire and gets a hefty percentage of rewards.

the problem with xbond is that it does not let you liquidate 100% of your holdings without a pool. thats why there is a demand for a pool.

i think better way to do it may be to somehow allow people to redeem 100% of their xbond holdings. something like allowing 1% of the original invested USD redeemable on top of the rewards may help people get out 100% in 100 positive rebases.

Designing a better payout or redeem strategy for xbond is much better than having a pool in my opinion.


forget the xbond pool for the risks stated above. a suggestion could be as follows:

the xBOND Treasury currently holds 2.2M USD. users should be permitted to cash out extra xBOND if they choose for a fee. the Treasury is willing to buy those xBOND off users at a discount, say 30%. this way the treasury is guaranteed to earn USD on the deal and users gain liquidity on their xbond.

the fee could also be a bonding curve, so that the more xBOND you cash out early, the more of a premium you need to pay.

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I agree, a better structured way to redeem might be a move in the right direction.

Its very interesting idea. How about if we combined this idea with the proposal mentioned to withdraw USD after 15 epochs. So the way it could work is once a user executes a withdrawal they have the option of withdrawing their funds immediately however it would be based on a bonding curve like you mentioned. However, the curve would progressively be reduced as it approaches the 15th epoch. So for example, on day one withdrawing all your funds would incur a 90% penalty to the treasury but on day 7.5 it would incur a 0% penalty. Of course smaller withdrawals would incur smaller penalties, but the penalties would be reduced as the 15th epoch is reached.

xBond pool idea is an option but has serious risks pointed out above. I support the idea of a combined proposal to allow withdraw after 15 epochs with a bonding curve. However, this will make the protocol even more complex.

To mitigate, I suggest a UI addition if possible to show xbond holders where they are in the epoch holding cycle and graphically depict the bonding curve, i.e. an xbond calculator/dashboard. This could permit better entry and exit cycle planning for xbond holders and lead to more variability. Not sure if such an interface is possible but I think it could go a long way to help users. Ultimately xbond is working but small incremental changes can help evolve further.

The issue is I think xbonds is not living up to its full potential. If a way to improve liquidity was introduced which was not a pool I think it could incentivize people to lock their USD in xbonds more. The problem now is alot of people don’t want to LP and negative rebases don’t seem so common. The factors are hindering us from having explosive growth. I definitely think improving xbond liquidity is the key here. Point noted on the complexity of combining the bonding curve and 15 epoch idea. It might be better to implement one of those two ideas for now.