💵Bonds Mechanism

What are HBOND?

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

When can I buy HBOND?

HBOND can be purchased only on contraction periods, when TWAP of HKN is below 1.

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

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

Where can I buy HBOND?

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

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

Why should I buy HBOND?

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.

HBONDs 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 HBOND

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

So after you buy HBOND using HKN, you get 2 possible ways to get your HKN back:

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

2. Sell back your HBOND for HKN while peg is above 1.1 (1 SVN) with a bonus redemption rate

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

Example:

1. When HKN = 0.8, burn 1 HKN to get 1 HBOND (HBOND price = 0.8)

2. When HKN = 1.15, redeem 1 HBOND to get 1.105 HKN (HBOND price = 1.27)

So, which one is better?

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

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

When can I swap HBOND for a bonus?

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