Bonding
Bonders are based
Last updated
Bonders are based
Last updated
Bonding is the process of trading an asset (LP, token, inscription) to the protocol for VAPOR. The protocol quotes an amount of VAPOR and a vesting period for the trade. It is important to know: when you create your bond, you are giving up your asset. The protocol compensates you with more VAPOR than you’d get on the market as a premium, but your exposure becomes entirely to VAPOR and no longer to the asset you used to bond.
Bonding to Vapor DAO allows you to buy VAPOR at a lower cost basis. In return for bonding your LP or other assets, the protocol will sell you VAPOR at a discount. You can see the difference in cost below (bonders get the Executing Price):
To create a bond, you must have the asset in your wallet. There will be multiple bondable assets, including:
VAPOR/USDC LP
SUI
USDC
VAPOREON
Vapor Inscriptions
and other assets
First acquire the asset, whether it be creating an LP on a DEX, a coin, or the inscriptions. You’ll then go to our website and select “Bond.” The protocol will quote a price for you. If you accept, you then send your asset to the treasury and receive a claim on VAPOR.
To redeem a bond, you’ll go to our website and select “redeem bond.” The protocol will recall when you bonded and your vesting term. If you have any pending rewards, you can claim them. Rewards accrue throughout the vesting period.
Once the bond is fully unvested, you can stake the acquired VAPOR, sell VAPOR, or add VAPOR/USDC LP and bond it once again for another discount.
The protocol quotes bond prices based on the protocol’s risk-free value (RFV). The Bond Premium is a protocol-governed policy tool that controls the premium charged for bonds. A lower premium means a higher discount and a higher incentive to bond.
The premium is determined by the total debt of the system and a scaling variable. This ties the price of bonds to the number of bonds outstanding; the fewer bonds outstanding, the lower the premium and the higher the discount.
Where BCV is the Bond Control Variable. BCV is a scaling factor at which bond prices change, and it can control the price of the bond so if the number is high, the price will be high too, resulting in less discount. You can think of it as a knob that turning it up can decrease the amount (capacity) of an asset in the treasury and turning it down can increase it.
