🛰️Bonds Mechanism

What is MOON?

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

When can I buy MOON?

MOON can be purchased only on contraction periods, when TWAP of DSF is below 1.

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

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

Where can I buy MOON ?

You can buy MOON if any are available, through the PIT on Savanna Finance, anyone can buy as many MOON as they want as long as they have enough DSF to pay for them.

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

Why should I buy MOON?

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.

MOON don't have a expiration date, so you can view them as a investment on the protocol, because long-term you get benefits from holding bonds.

Incentives for holding MOON

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

So after you buy MOON using DSF , you get 2 possible ways to get your DSF back:

1. Sell back your MOON for DSF while peg is between 1.01 - 1.1 (1 MMF) with no redemption bonus. This to prevent instant dump after peg is recovered

2. Sell back your MOON for DSF while peg is above 1.1 (1 MMF) with a bonus redemption rate

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

Example:

1. When DSF = 0.8, burn 1 DSF to get 1 MOON (MOON price = 0.8)

2. When DSF = 1.15, redeem 1 MOON to get 1.105 DSF (MOON price = 1.27)

So, which one is better?

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

But, if I buy DSF at 0.8, burn it for MOON, and redeem it at 1.15, I'm getting 1.105 DSF * 1.15 (DSF current price) = 1.271 (+$0.47) per MOON 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 DSF and MOON holders when needed.

When can I swap MOON for a bonus?

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