Bonds (COMING SOON)

Overview

BOHM.MONEY bonds are a financial primitive that allow transacting assets, often between the protocol and individual stakeholders, over a specified time-period and at completely market-driven prices. In other words, BOHM.MONEY bonds are a market-driven pricing mechanism for any two BOMB Chain tokens that does not rely on third parties like oracles.

Bond mechanics

Bonds are a financial primitive that allow transacting assets, often between the protocol and individual stakeholders, over a specified time-period and at completely market-driven prices. The bonds pricing mechanism is dictated by a modified dutch auction, called a Sequential Dutch Auction (SDA), which is solely driven by market actors and does not rely on oracles.

Purchasing a bond

When purchasing a bond, purchasers commit a capital sum upfront in return for BOHM upon maturity. Thus, a bond’s profit is uncertain and dependent on the price of BOHM at the time of maturity.

Bond payouts are dictated by their current discount percentage. A positive discount percentage indicates that the bond is offering a price less than the market price. Alternatively, a negative discount percentage on a bond is offering a price greater than the market price.

This variable discount rate is how a bond market internally governs its supply by responding to demand. This ensures that a bond market’s supply is sold over the specified period of time.

:::info More information on bonds can be found in the Bond Protocol documentation :::

Types of BOHM.MONEY bonds

Reserve Bonds

Reserve Bonds are bonds which sell BOHM at a discount to acquire treasury reserve assets. Reserve bonds serve a dual purpose - not only do they stabilize the BOHM price in bullish market conditions, but they also accumulate the profits from these bonds as treasury reserves. These accumulated reserves are later used to stabilize the price in bearish conditions using Inverse Bonds, described below.

Inverse Bonds

Inverse Bonds are bonds which sell Reserve assets (generally USD stablecoins) in exchange for BOHM, the inverse to Reserve Bonds. Like Reserve Bonds, these bonds are used to stabilize the BOHM price. Unlike reserve bonds, they vest instantly, and are the core mechanism of absorbing sell pressure from the market.

BOHM Bonds

BOHM bonds are bonds which sell bBOHM for BOHM. The purpose of these is to transition off of sOHM staking, which is perpetual and fully liquid, into a time-locked, semi-liquid form of staking.

Liquidity Bonds

Liquidity Bonds are similar to Reserve Bonds, except that they bond in Liquidity Provider (LP) tokens issued by an AMM. These bonds are used when there is a need to accumulate more liquidity.