Bonding
What is Bonding?
Bonding is the secondary value accrual strategy of Rug. When users bond RUG tokens, they are actually selling their assets in order to buy a bond from the protocol. Bonding Actions are a cross between a fixed income product, a futures contract, and an option. The protocol quotes the bonder with terms for a trade at a future date. These terms include a predefined amount of RUG the bonder will bond and the time when vesting is complete. The bond becomes redeemable as it vests. i.e. in a 5-day term, after 2 days into the term 40% of the rewards can be claimed.
Bonding is an active, short-term strategy. The price discovery mechanism of the secondary bond market renders bonds discounts more or less unpredictable. Therefore bonding is considered a more active investment strategy that has to be monitored constantly in order to be more profitable as compared to staking.
Allowing users to purchase bonds through Bonding allows Rug to accumulate its own liquidity. We call our own liquidity [ROL (rug-owned liquidity)]. More [ROL] ensures there is always locked exit liquidity in our trading pools to facilitate market operations and protect token holders. Since Rug becomes its own market, on top of additional certainty for RUG investors, the protocol accrues more and more revenue from LP rewards bolstering our treasury.
Bond Your RUG (🚩, 🚩)
The Bond page allow users to bond RUG from the protocol at a discount by trading it with i) liquidity (LP tokens) or ii) other assets. The former is called liquidity bonding and the latter reserve bonding.
The bonding action creates bonds which take roughly [15] epochs to vest, and RUG tokens are vested linearly to the user over that period. Liquidity bonding help the protocol to accumulate and lock liquidity, while reserve bonding allow the protocol to grow its treasury, and thus its Backing per RUG faster.
Rug offers currently different types of assets that can be used to bond RUG on its website:
MIM
DAI
RUG-MIM LP
wAVAX
RUG-AVAX LP
Settings
Settings is a feature that allows you to bond RUG while sending the acquired RUG to another address. This is useful for additional privacy, or for bonding multiple RUG while the current bonds are still vesting. Note that if the same account holds multiple bonds, the pending rewards from the earlier bonds have to be forfeited. Note: What this means in practice, is that if a user has vested rewards from a previous bonding action purchase, and then bonds another RUG, the 5 day timer is reset for all the rewards, and the vesting period will start again.
1.
Go to the Bond page and select the assets you want to use to bond RUGs.
2.
Select the amount that you would like to bond, then click on the cogwheel icon at the top right of the page.
3.
The Settings menu will show up. At the Recipient Address field, you can specify a different address that will receive the vested RUG. By default, it is filled with your current address.
4.
You can also modify the Slippage field to increase or decrease the likelihood of your order getting through. A higher slippage increases that likelihood, but you may get a more undesirable fill price.
5.
Close the Settings menu by clicking the cross icon.
6.
Click "Approve" and sign the transaction.
7.
After the "Approve" transaction has been processed successfully, click "Bond" and sign the transaction. Voila, you have bonded your first RUG tokens using the Settings!
Notes:
The "Approve" transaction is only needed when bonding for the first time; subsequent bonding only requires you to perform the "bond" transaction.
When using Settings, do not alter the bond amount after you have closed the Settings menu, as it will reset the recipient address.
How to Redeem
Go to the Bond page and select the bond type you have purchased. Select the "Redeem" tab.
Use the Claim to claim all of your available rewards, and have the pending RUG sent to your wallet.
Use the Claim and Autostake button to have all the available RUG sent automatically to the staking contract and receive the sRUG as a receipt for your stake!
Reading the Info
Bond Page:
RUG Price is the price of RUG you get from bonding. You can calculate the bond price using the following formulae: - LP Bond: (Value of your LP token / RUG you'll get from bonding) - MIM Bond: (Value of your MIM token / RUG you'll get from bonding)
RUG Price is the market price of RUG.
Your Balance is your balance of LP tokens or asset used to bond.
You Will Get tells you how many RUG tokens you will get from bonding.
Max You can Buy maximum amount of RUG available to be bought.
Debt Ratio measures the total amount of RUG created from bonds that have yet to be paid out by the protocol. The debt ratio is calculated differently for LP bonds and MIM bonds: - LP Bond: (RUG created from unredeemed bonds / RUG total supply) - MIM Bond: (RUG created from unredeemed bonds / RUG circulating supply)
Vesting Term measures the period a bonding action takes to fully redeem. This number is expressed in days.
Minimum Purchase: Minimum amount of RUG that can be bonded
Redeem Page.
Time Until fully vested is the time until the RUG bonded will be fully redeemable
Pending Rewards is the amount of RUG you are entitled to receive from bonding.
Claimable Rewards is the amount of RUG that you can claim now. This amount keeps increasing as RUG is vested to you over the vesting period.
ROI is the Return On Investment
Vesting Term measures the period a Bonding action takes to fully redeem. This number is expressed in days.
How to Bond RUG
1.
Make sure you have MIM in your wallet. For example, you can go to Trader Joe to swap AVAX for MIM if you don't have any, as the deepest liquidity is there!
2.
Head to the MIM Bond page of the Rug website. There are two tabs: "Bond" and "Redeem". Make sure "Bond" is selected.
3.
Type in the amount of MIM you would like to use in order to bond RUG. Make sure you are not trying to bond more than is allowed. The Max You Can Buy field below shows the maximum amount of RUG you can purchase.
4.
If this is your first purchase, you need to approve the Rug contract to spend your MIM. Click "Approve" and sign the transaction.
5.
After the "Approve" transaction has been processed successfully, refresh the page. The "Approve" button should be changed to display "Bond" by now.
6.
Click "Bond" and sign the transaction. Voila, you have bonded your first RUG using MIM tokens!
How to Bond RUG-MIM
1.
Make sure you have RUG-MIM LP tokens in your wallet. You need to go to TraderJoe and add liquidity for the RUG-MIM LP pool to acquire them. Find the link to provide liquidity to the pool here.
2.
Head to the RUG-MIM Bond page of the Rug website. There are two tabs: "Bond" and "Redeem". Make sure "Bond" is selected.
3.
Type in the amount of RUG MIM LP tokens you would like to use in order to bond RUG. Make sure you are not trying to bond more than is allowed. The Max You Can Buy field below shows the maximum amount of RUG you can purchase.
4.
If this is your first purchase, you need to approve the Rug contract to spend your RUG-MIM LP tokens. Click "Approve" and sign the transaction.
5.
After the "Approve" transaction has been processed successfully, refresh the page. The "Approve" button should be changed to display "Bond" by now.
6.
Click "Bond" and sign the transaction. Voila, you have bonded RUG using RUG-MIM LP tokens!
How to Bond wAVAX
1.
Make sure you have wAVAX tokens in your wallet. You need to go to TraderJoe and wrap your AVAX tokens into wAVAX to acquire them, or use the "USE AVAX" option in the UI to use your native AVAX tokens.
2.
Head to the wAVAX Bond page of the Rug website. There are two tabs: "Bond" and "Redeem". Make sure "Bond" is selected.
3.
Type in the amount of wAVAX tokens you would like to use in order to bond RUG. Make sure you are not trying to bond more than is allowed. The Max You Can Buy field below shows the maximum amount of RUG you can purchase.
4.
If this is your first purchase, you need to approve the Rug contract to spend your wAVAX tokens. Click "Approve" and sign the transaction.
5.
After the "Approve" transaction has been processed successfully, refresh the page. The "Approve" button should be changed to display "Bond" by now.
6.
Click "Bond" and sign the transaction. Voila, you have bonded RUG using wAVAX tokens!
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