ELI5 GTON Bonding Mechanics

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May 4th, 2022

GTON Bonding overview in a simple write-up.

I. Bonding Types

According to the Proposal on Bonding&Staking parameters, the GC DAO is set to launch the bonding functionality with the following setup:

  1. Short-term bonding (STB) 1 week lock (~7 days). Discount Rate is 7%. Permissionless.
  2. Mid-term bonding (MTB) 3 months lock (~90 days). Discount Rate is 15%. Permissionless.

II. Allocation

1.85 mln (9% of the GTON supply), which is split into 1.2 mln GTONs (~2/3 of Bonding allocation) for STB and 0.65 mln GTONs (~1/3 of Bonding allocation) for MTB.

Assets gained into the Treasury from bonding will be used to establish liquidity. As the bonding allocation is being used up, the price can be affected. If the model to increase liquidity and onboard new users through bonding remains relevant after the entire allocation is exhausted, another proposal to rebalance the allocations from the treasury to reinstate bonding with a new GTON allocation can be put forward.

III. Autostaking of bonds

Upon the claim of the bonding allocation, the automatically staked sGTON is transferred to the bond owner, paid out of the staking allocation. In addition, a premium is calculated for the lifetime of the bond from its purchase date to its expiry and added to the final sGTON payout. Therefore, to get the same benefits as stakers, the users who provide their assets for GTON in exchange for bonds should claim the bond after its expiry as soon as possible.

IV. Whitelisting mechanics

To be eligible for bonding, every user must be on a whitelist.

The whitelist contains multiple sub-lists that can be added over time. Each sub-list represents users that are part of different partners’ communities and meet specific criteria such as having a partner token or an NFT/POAP NFT on their balance, or GTON Capital community members that showed activity and engagement in multiple initiatives. The latter can be the EB (early birds), first staking adopters, participants of the marketing contests etc. The first whitelist proposals will be put to a vote in the upcoming days.

How to enter the Bonding whitelisting?

The decisions on the eligible sub-whitelists are to be made by the DAO. Community members of any project, whether they represent a partner protocol or any audience valuable for GTON Capital, can be included as a separate whitelist in case of mutual benefit.

VI. Bonds as NFTs

When a user buys a bond position, they are issued an NFT token that can be exchanged for the amount of GTON that the user is entitled to after the vesting period.

How does it work?

By purchasing a bond, a user purchases GTON directly from the Treasury but with a fixed discount to the GTON’s current market price vested over a period of time. The bonder’s profit depends on the GTON price when the bond expires, however the ROI should include the autostaking which is applied to the bond during vesting.

Technically, with the bond, the user buys sGTON, which represents staked GTON, in a form of NFT storing the details of the position (amount, time of purchase, time of a bond etc). During the vesting period, locked sGTON generates staking rewards in a form of sGTON and the accrual stops at the date of expiry.

So, upon the expiry, the NFT can be burnt to use sGTON (still staked GTON) with no need for any additional actions for putting GTON into staking: the staking reward generation continues as soon as the NFT is burned and sGTON unlocked.

However, if the user intends to use actual GTON (for trading/farming in other DeFi applications) they’ll have to unstake GTON i.e. exchange sGTON to GTON.

Bonding is designed to ensure maximum flexibility for the users: the bond NFTs are transferable even during the vesting time; upon the expiry, there’s no due date to be exchanged for sGTON.

VII. Purchase currencies

Currencies to purchase bonds which can vary over time are subject to DAO votings. The first voting on this matter will be announced prior to the bonding when all major developments are done.

VIII. Purchase price

The bond purchase price is also a subject to the DAO voting and will take place prior to the bonding launch.

IX. Limits

There are limits on each whitelisted account which are to be determined in the upcoming vote. Currently, we propose that those limits restrict both the number of allowed bond purchases per year and the overall purchase amount.

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