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Bonds
What is Bonding?
Bonding, recently popularized by OHM, TIME, and others, revolutionized the landscape of DeFi in 2021. In a typical bonding program, you give LP shares to the protocol in exchange for protocol tokens at a hefty discount. It’s a win-win: the protocol gets to own its own liquidity (protocol owned liquidity, or POL, also called protocol controlled value, or PCV), and users get to buy tokens at a lower cost basis.
The amount of the discount is based on some complicated math plus supply and demand, but for a general overview, you can check out this article written by OlympusDAO.
BUT! Please note that the OolongSwap bond program will not function exactly like the OlympusDAO bond program. We have learned and observed from other successful projects while adding in our own in-house recipe to create these special Oolong bonds :D!
And most importantly, the rate of OLO being farmed and staked by Oolong PCV will grow exponentially because Oolong PCV never sells! When it farms and stakes OLO, it takes the newly earned OLO to farm and stake again and earn more OLO…this is what we call the scheme of mega compounding OLO ;)
Furthermore, in the process of mega compounding OLO, the Oolong PCV will just grow stronger and thicker and eventually IMMORTAL. The goal is for Oolong PCV to become the biggest OLO holder who is also an absolute diamond hand 💎💎💎 The best thing of all these? They will all be done permissiolessly and frictionlessly on chain!
Why is Bonding a Good Thing?
Bonding is a win-win-win for OolongSwap, bonders, and OLO holders:
- For the protocol:
It allows us to increase the assets and “cash flow” for our PCV. This is really important for our AMM functionality, as it allows our liquidity pool volume to remain more stable, we can accumulate the LP fees instead of paying them to liquidity providers, and we don’t have to incentivize farming with high APRs, allowing us to lower overall emissions and limit OLO inflation.
- For the bonders:
Purchase the OLO tokens at a discount price and earn interest during the vesting period! (more details below!)
- For OLO holders:
Many of you have been with us from the very beginning, and one of our main goals in 2022 is to find a lot of ways to return value to our community. There are two major benefits here. First, lowering farm emissions will reduce sell pressure. Second, the unique mechanisms of our program will also create buy pressure, causing a self-perpetuating positive feedback loop. Let me explain that with some more details.
How Does it Work?
- 1.We will be releasing the bonds in batches (giving out too many discounted OLO at once will increase the sell-pressure of OLO, which we want to avoid). Therefore in the first batch offering, there will be a LIMITED supply of around $100K worth of bonds. And initially, there are two types of assets users can use to purchase the OLO bonds. (Bond supply and other assets will be added over time)
- Whitelisted users will have early access to buy bonds
- USDC
- OLO-USDC
2. Bonds will be sold on a Dutch auction model
- The initial discount will be 5% from market price
- Discount will increase slowly over time until the entire bond supply is exhausted
3. The protocol will take 50% of the USDC to purchase OLO at the market and create USDC-OLO LP
- All the USDC-OLO pairs will be used to LP farm and suck up more OLO from the circulating supply. These farmed OLO will be locked away in the Oolong PCV to continue our mission of letting Oolong PCV become the biggest OLO whale diamond hand💎
4. Bonders will receive OLO at the bonded discount
5. OLO will be automatically converted to YOLO at the time of purchase and auto-staked — you begin earning interest immediately!!!!
- You can trigger the YOLO 5-day cooldown period immediately so it has the effect of a 5-day vesting period, except you are earning interest the whole time — a major perk for bonders!
The combination of reduced sell pressure from reduced emission and locking up OLO supply in PCV, increased buy pressure from the OLO buyback for LP pairing, and immediate YOLO APR accrual will not only benefit the bonders, the OLO holders but also make Oolong invincinble and sustainable in the long term 🚀
Last modified 4mo ago
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