Have you heard about OlympusDAO and one or more of its forks? Have someone told you that you should bond, that is, to buy bonds, and to invest in the project? But, what is bonding all about? In this short article, I will try to explain it in a very easy way.
Bonding as a way of getting a discount when you buy!
When you buy tokens using a centralized or decentralized exchange, you buy the tokens and that is it. They are yours and you can do with them whatever you want to.
In the case of OlympusDAO (or any of the forks), you can take the tokens you just bought and stake them on the platform for a nice APY that will give you rebase rewards every 8 hours. You support the platform by buying tokens, thus ensuring that the price is keeping level or maybe even increasing, and that's it.
But, then you have bonding... what is that all about?
Below you can see a screenshot from the Wonderland (TIME) website (one of the most popular forks of OlympusDAO).
The current price of a TIME token is $1655. But, what you can see is that there is a minting/bonding discount. Here you can see that there are discounts available for the following pairs:
- wMEMO-MIM SLP
- w.ETH.e
- MIM
You can also see TIME-AVAX LP and some other pairs in the list, though they do not have any discounts available right now.
What does this mean?
You can buy a TIME token for $1655 on an exchange. But, if you decide to buy it directly from the Wonderland website with a MINT/BOND discount, you can get it cheaper. If you buy it directly using wETH.e, you will get it with a 5.47% discount (which is a nice discount). Depending on the platform, it will take 5 days before you receive the full amount of tokens you desire to buy, thus ensuring that you do not just buy with a discount and sell at once (for profit).
When you buy directly from the protocol (bonding), the money you use is given DIRECTLY to the protocol itself, thus growing the treasury of the protocol, which is later used to grow the protocol and to ensure the price of the token in the future. That is why these protocols are all eager to make you bond instead of just buying of an exchange, because it will grow the protocol and grow the treasury of the protocol. And if you buy a bond using liquidity pool tokens, then you will support the protocol through giving them your actual liquidity tokens (thus growing the treasury) and then the protocol will grow in the future as they receive fees with every single trade using that trading pair (as they own the liquidity).
For you as a buyer, you are winning - you get the tokens cheaper, and you strengthen the protocol, which also means that the value of your tokens is built on a stronger foundation.
Do you want to learn more about rebase tokens, bonding, and also check out a very interesting experiment dealing with OlympusDAO and its most popular forks? Check this article: https://www.ipaddressguide.org/jade-vs-time-vs-spa-vs-fort-vs-gyro-vs-sb-vs-hec-vs-papa-vs-klima-vs-wagmi-vs-tac-which-is-the-best-project-where-to-invest-background-information-and-a-real-time-experiment/