Bonding

PandoraDAO bonds are a financial primitive that allow transacting assets, often between the protocol and individual stakeholders, over a specified time-period and at completely market-driven prices. In other words, PandoraDAO bonds are a market-driven pricing mechanism for any two ERC-20 tokens that does not rely on third parties like oracles.

What is bonding?

Bonding is the secondary value accrual strategy of PandoraDAO. This mechanism makes it easier for PandoraDAO's treasury to acquire liquidity and other reserve assets by offering PDRAI tokens at a reduced price in exchange for these assets.

The bonder is presented with conditions such as the bond price, the amount of PDRAI tokens that the bonder will receive, and the vesting period. The bonder has the option to claim a portion of the rewards (PDRAI tokens) as they vest, and after the vesting period has ended, they can claim the remaining amount.

Bonding is an active, short-term strategy. The mechanism for determining prices in the secondary bond market makes it difficult to predict the level of discounts on bonds. Therefore, bonding is considered a more dynamic investment strategy that requires constant attention in order to achieve greater returns than staking.

Bonding allows PandoraDAO to accumulate its own liquidity. We refer to our own liquidity as Protocol Owned Liquidity (POL). A higher level of POL ensures that there is always locked liquidity in our trading pools to assist market transactions and safeguard token holders.

As PandoraDAO establishes its own market, in addition to providing greater security for investors, the protocol generates increasing revenue from LP rewards, which strengthens our treasury.

Types of PandoraDAO bonds

​Reserve Bonds​

Reserve Bonds are bonds which sell PDRAI at a discount to acquire treasury reserve assets.

Reserve bonds serve a dual purpose, of not only stabilizing PDRAI price in bullish market conditions, but also accumulating the profits from these bonds as treasury reserves. These accumulated reserves are later used to stabilize the price in bearish conditions using Inverse Bonds, described below.

Inverse Bonds​

Inverse Bonds are bonds which sell Reserve assets (generally USD stablecoins) in exchange for PDRAI, the inverse to Reserve Bonds.

Like Reserve Bonds, these bonds are used to stabilize the PDRAI price. Unlike reserve bonds, they vest instantly, and are the core mechanism of absorbing sell pressure from the market.

PDRAI Bonds​

PDRAI bonds are bonds which sell PDRAI for PDRAI. The purpose of these is to transition off of xPDRAI staking, which is perpetual and fully liquid, into a time-locked, semi-liquid form of staking.