Bonds

What are LBOND (Bonds)?

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

When can I buy LBOND (Bonds)?

LBOND can be purchased only during contraction periods, when TWAP of LEPR is below 1 USDC.

At the beginning of every new epoch during contraction periods, LBONDs are issued in the amount of 3% of current LEPR circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of circulating supply of LEPR, no more bonds will be issued.

LBOND TWAP (time-weighted average price) is based on LEPR price TWAP from the previous epoch as it ends. This mean that LEPR TWAP is real-time and LBOND TWAP is not.

Where can I buy LBOND (Bonds)?

You can buy LBONDs if any are available, on the Bonds page at Leprechaun Finance. Anyone can buy as many LBONDs as they want as long as they have enough LEPR to pay for them.

There is a limit of available LBONDs per epoch during contraction periods (3% of LEPR's current circulating supply), and are sold first-come-first-serve.

Why should I buy LBOND (Bonds)?

First and most important reason is Bonds help maintain the peg, but they are not the only measure in place to keep the protocol on track.

LBONDs don't have an expiration date, so you can view them as an investment in the long-term health of the protocol to be redeemed for a premium at a later date.

Incentives for holding LBOND

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

So after you buy LBOND using LEPR, you get 2 possible ways to get returns on your bonds:

1. Sell back your LBOND for LEPR while the peg is between 1 - 1.1 USDC with no redemption bonus. This is in place to prevent an instant dump as soon as peg is recovered.

2. Sell back your LBOND for LEPR while the peg is above 1.1 USDC with a bonus redemption rate

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

Example:

1. When LEPR= 0.8, burn 1 LEPR to get 1 LBOND (LBOND price = 0.8)

2. When LEPR= 1.15, redeem 1 LBOND to get 1.105 LEPR (LBOND price = 1.27)

So, which one is better?

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

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

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

We will adjust our use cases, to have different behaviors on contraction and expansion periods to benefit both LEPR and LBOND holders when needed.