Bonds
What are SNOBOND (Bonds)?
Bonds are unique tokens that can be utilized to help stabilize SNO price around peg (1 JOE) by reducing circulating supply of SNO if the TWAP (time-weighted-average-price) goes below peg (1 JOE).
When can I buy SNOBOND (Bonds)?
SNOBOND can be purchased only on contraction periods, when TWAP of SNO is below 1.
Every new epoch on contraction periods, SNOBOND are issued in the amount of 3% of current SNO circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of circulating supply of SNO, no more bonds will be issued.
Note: SNOBOND TWAP (time-weighted average price) is based on SNO price TWAP from the previous epoch as it ends. This mean that SNO TWAP is real-time and SNOBOND TWAP is not.
Where can I buy SNOBOND (Bonds)?
You can buy SNOBONDs if any are available, through the BONDS on https://snowyowl.finance/bonds, anyone can buy as many SNOBONDs as they want as long as they have enough SNO to pay for them.
There is a limit amount (3% of SNO current circulating supply) of available SNOBONDs per epoch while on contraction periods, and are sold as first come first serve.
Why should I buy SNOBOND (Bonds)?
First and most important reason is Bonds help maintain the peg, but will not be the only measure use to keep the protocol on track.
SNOBONDs don't have a expiration date, so you can view them as a investment on the protocol, because longterm you get benefits from holding bonds.
Incentives for holding SNOBOND
The idea is to reward SNOBOND buyers for helping the protocol, while also protecting the protocol from being manipulated from big players.
So after you buy SNOBOND using SNO, you get 2 possible ways to get your SNO back:
Sell back your SNOBOND for SNO while peg is between 1 - 1.1 (1 JOE) with no redemption bonus. This to prevent instant dump after peg is recovered
Sell back your SNOBOND for SNO while peg is above 1.1 (1 JOE) with a bonus redemption rate
The longer you hold, the more both the protocol and you benefit from SNOBONDs.
Example:
When SNO = 0.8, burn 1 SNO to get 1 SNOBOND (SNOBOND price = 0.8)
When SNO = 1.15, redeem 1 SNOBOND to get 1.105 SNO (SNOBOND price = 1.27)
So, which one is better?
If I buy SNO at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$ per SNO
But, if I buy SNO at 0.8, burn it for SNOBOND, and redeem it at 1.15, I'm getting 1.105 SNO * 1.15 (SNO current price) = 1,271 (+0.47$) per SNOBOND 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 SNO and SNOBOND holders when needed.
When can I swap SNOBOND for a bonus?
SNOBOND TWAP (time-weighted average price) is based on SNO price TWAP from the previous epoch as it ends. This mean that SNO TWAP is real-time and SNOBOND TWAP is not. In other words, you can redeem SNOBOND for a bonus when the previous epoch's TWAP > 1.1.
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