LP Bonding incentivizes users to sell the protocol LPs in return for discounted BOMB tokens. These LPs will support the protocol in building protocol-owned liquidity. This benefits all investors given it allows for far more stable liquidity than the standard DeFi approach of directly incentivizing LP deposits.
Currently we offer bonding on BOMB-BTCB, BSHARE-BNB and PHUB-BTCB. Bonds have a 14-day vesting period which means your discounted payout tokens will be available to claim at the end of this period. This is to reduce immediate sell pressure on the tokens.
Example (all figures are illustrative)
You have 1 BOMB-BTCB-LP valued at $200. The BOMB price is $0.54 meaning that based on the standard market rate (i.e. without bonding discount) 1 LP would be tradable for 370 BOMB.
Assuming a 7.4% discount is available on bonds, you would receive 400 BOMB tokens in exchange for your LP – 30 more than the market rate. With BOMB at $0.54 this means the BOMB you’d receive would be worth $216 at the point of bonding – $16 higher than what you paid for your LP.
It’s important to remember that there is a vesting period and therefore it’s possible the value of both the LP and BOMB will move prior to the point you can claim your BOMB.
What determines the discount or premium?
Bond price is determined by the supply and demand of bonds meaning the price trends higher when there is more demand. As a result, bonders compete with each other to try and secure the largest discount.
When a bond market is created, a number of variables are set including the capacity (i.e. the maximum BOMB allocated) and the expiry date. As bond purchases throughout any given day progress towards the maximum allocation the discount will decrease until the capacity has been reached, at which point a premium will apply.
How to get started
Getting started is easy and simply involves creating your LP(s) and depositing via our LP Bonding page.
· Go to the BOMB Money Bonding page and click “Deposit”. A window will pop up and ask how many LP tokens you want to deposit while also showing how many payout tokens you will receive. Enter your desired amount and hit “Confirm”. Note that it will show the maximum number of payout tokens available.
· You will now see your Bonding positions on this page along with the remaining vesting period.
· You will need to return to the Bonding page at the end of the vesting period and claim your BOMB. Note that you can create additional Bonding positions at any time and it will not reset the time of your previous positions.