Bonds

How It Works:

DracoFi will conduct regular bond sales at the end of each epoch (i.e. 8 hours).

Users can purchase $DRACO from the treasury at a discounted priceusing either SOL or $DRACO-SOL LP tokens. The bond price is determined by several factors, including the market price, the percentage of $DRACO in the treasury, the percentage of staked $DRACO, and the percentage of SOL in the treasury.

Users who purchase bonds will have their tokens vested for 10 epochs to avoid excessive sell pressure on the open market.

Bonding is considered an active, short-term strategy. The price discovery mechanism makes bond discounts somewhat unpredictable, so users need to monitor the market closely to maximize their profits compared to staking.

Benefits for Users:

The main benefit for users is the ability to purchase $DRACO at a discounted price, avoiding trading taxes when buying and receiving their $DRACO at a fixed price.

This allows users to strategize long-term between redeeming and market selling, or staking to increase their exposure to DracoFi. Staking is likely the most profitable strategy in the short term, given the potential for compounded rewards.

Additionally, users can combine bond purchases with staking to create a powerful strategy that offers both stability and liquidity. By staking $DRACO obtained through bonds, users can amplify their exposure to DracoFi while maintaining a more liquid position.

Benefits for DracoFi:

For DracoFi, bond sales serve to rebalance the treasury by increasing its exposure to SOL and reducing its exposure to $DRACO. If there is an excess of SOL in the treasury, bond issuance will be reduced until the treasury accumulates more $DRACO through redemptions or staking.

By using bonds as a major component, DracoFi can control when tokens enter circulation and at what discount, helping to balance market dynamics and maintain a high token price.