Bond Mechanism

$BFTM

What is $BFTM (Bonds)?

Bonds are unique tokens that can be utilized to help stabilize $DFTM price around peg (1 FTM) by reducing the circulating supply of $DFTM if the TWAP (time-weighted-average-price) goes below peg (1 FTM).

When can I buy $BFTM (Bonds)?

$BFTM can be purchased only on contraction periods when TWAP of $DFTM is below 1.

Every new epoch on contraction periods, $BFTMs are issued in the amount of 3% of the current $DFTM circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of the circulating supply of $DFTM, no more bonds will be issued.

Note: $BFTM TWAP (time-weighted average price) is based on $DFTM's price TWAP from the previous epoch as it ends. This means that $DFTM TWAP is real-time and $BFTM TWAP is not.

Where can I buy $BFTM (Bonds)?

You can buy $BFTMs if any are available, through xxx. Anyone can buy as many $BFTMs as they want as long as they have enough DFTM to pay for them.

There is a limit amount (3% of $DFTM current circulating supply) of available $BFTMs per epoch while on contraction periods, and are sold as first come first serve.

Why should I buy $BFTM (Bonds)?

First and most important reason is that bonds help maintain the peg, but will not be the only measure used to keep the protocol on track, more on that in the DAO Fund section here.

$BFTMs don't have an expiration date, so you can view them as an investment in the protocol because long term you get benefits from holding bonds.

Incentives for holding $BFTM

The idea is to reward $BFTM buyers for helping the protocol, while also protecting the protocol from being manipulated by big players.

So after you buy $BFTM using $DFTM, you get 2 possible ways to get your $BFTM back:

1. Sell back your $BFTM for DFTM while peg is between 1 - 1.1 (1 FTM) with no redemption bonus. This is to prevent instant dump after peg is recovered

2. Sell back your $BFTM for DFTM while peg is above 1.1 (1FTM) with a bonus redemption rate

The longer you hold, the more both the protocol and you benefit from $BFTMs.

1. When DFTM = 0.8, burn 1 DFTM to get 1.2 $BFTM ($BFT price = 0.8)

2. When DFTM = 1.15, redeem 1 $BFTM to get 1.105 DFTM($BFTM price = 1.27)

If I buy $DFTM at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per $DFTM

But, if I buy $DFTM at 0.8, burn it for $BFTM, and redeem it at 1.15, I'm getting 1.105 DFTM* 1.15 (DFTM current price) = 1,271 (+0.47$) per $BFTM redeemed.

But what if getting back to peg is taking too long?

We are going to adjust our use cases, to have different behaviors on contraction and expansion periods to benefit DFTM and $BFTM holders when needed.

When can I swap $BFTM for a bonus?

$BFTM TWAP (time-weighted average price) is based on DFTM price TWAP from the previous epoch as it ends. This means that $DFTM TWAP is real-time and $BFTM TWAP is not. In other words, you can redeem $BFTM for a bonus when the previous epoch's TWAP > 1.1.