Bonding assets with PoL is not loaning assets to PoL. You are actually selling those LP assets to the protocol and receiving POLYCUB in exchange that vests over 7 days
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Bonding assets with PoL is not loaning assets to PoL. You are actually selling those LP assets to the protocol and receiving POLYCUB in exchange that vests over 7 days
That makes a lot more sense in context but the ultimate overarching question remains unanswered
The ROI of a bond is determined by market demand for it. If there's a lot of demand for the bond, the ROI will be near 0% or even negative % until demand slows and it self corrects to a higher % ROI that people are willing to bond for.
Essentially, the treasury owns a stack of growing POLYCUB. It's selling it to users who want to buy POLYCUB at (potentially) a small discount. The discounts are likely to be super low but when timed correctly (similar to HBD conversions over 3.5 days).
There's heavy game theory involved. The treasury wins by getting more non-POLYCUB assets which are deployed in 2 ways:
Both of these can be done simultaneously which means stacked yield for the treasury = more POLYCUB bought and deployed for long-term LP incentive pool
Yes,was about to comment on this, however, if that be the case, how sustainable and attractive is that? I mean I totally love the idea behind giving out loans via the Collateralized contract, but bonds?
Let's say, considering the current Apr of polycub-Weth pool, why would anyone choose to be in a pool(bond) to earn approximately 6% in 7 days, when that polycub-weth farm gets them approximately 11%?
The current yields will even out. Also market dynamics will determine what ROI is attractive for that particular bond. The bonds for POLYCUB-WETH and POLYCUB-USDC are likely to have a small % of the bond allocation.
The major bonds are non-POLYCUB bond. Like WETH-WBTC. It's similar to an HBD conversion game theory: you have the opportunity, when timed correctly, to make a few % ROI in a few days time.
Oh, that clears things up...