Libero Smart Bond
Bonding is the secondary value accrual strategy of Libero. It allows Libero to acquire its own liquidity and other reserve assets such as WBNB by selling Libero at a discount in exchange for these assets. The protocol quotes the bonder with terms such as the bond price, the amount of Libero tokens entitled to the bonder, and the vesting term. At the end of the vesting term, the full amount will be claimable.
Bonding is an active, short-term strategy. The price discovery mechanism of the secondary bond market renders bond 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 buying directly on the market.
Bonding allows Libero to accumulate its own liquidity. We call our own liquidity Protocol Owned Liquidity (POL). More POL ensures there is always locked exit liquidity in our trading pools to facilitate market operations and protect token holders. Since Libero becomes its own market, on top of additional certainty for Libero investors, the protocol accrues more and more revenue from LP rewards bolstering our treasury.
For long-term sustainability, we can now offer an innovative and easy-to-implement bonding mechanism which enables protocols to own their own liquidity, forever.
Owning their own liquidity, protocols earn on transaction fees on the LP token they purchase. By not having to pay farmers to provide liquidity, they also save incentives which could be used for other things.
The road to self-sustainability and long-term growth is ready.
- 1.For users:
- Users come to Libero Smart Bond section on the website and check if there is a discounted bond.
- Not that every time there is a discounted bond available, if someone already bought all the discounted bond, there will be no discounted bond left. Or when the project decide that not to sell bond, there'll be no discounted bond available.
- If there is bond available, usually with a discount, users can buy Libero with a discounted price, for example 10%. So they pay 10% less WBNB ( or BUSD, or LIBERO-BNB LP or whatever the protocol choose) compare to what they have to pay on normal exchanges.
- Users can claim their Libero right after purchase or a few days later (usually 5 days) depend on the setting of the protocol.
- 80% of the purchased money will go to normal exchange to market buy, help increase the price and market cap.
- 20% of the purchased money will go to the treasury of the protocol, make the protocol more sustainable.
- The 80/20 ratio can be configured by the protocols at any time depends on market situation.
2. For partnered protocols:
- Libero offer this service to any partners with 2% fee based on the volume. Using our smart contracts, the DAO’s or protocol’s treasury will be able to offer their token for a discount in exchange for a liquidity pair, or any other token they choose ( WBNB, BUSD, LPs, etc.).
- With the "Smart" feature of Libero Smart Bond, for the first time ever in Defi world, protocols' price and marketcap can grow together with its treasury. Both long term sustainability and short term price action is boosted through Libero's innovative Smart Bond Service.
- Users can create LPs or use existing ones to exchange those for discounted tokens, which could be directly put into an address of the protocols choosing. This further incentivizes users to stick around to profit from the protocol’s revenues.
- Users avoid the risk of impermanent loss by not keeping the liquidity (eg. LIBERO-BNB) themself, they give it to the protocol in exchange for a discounted price.
- Protocols/DAOs do not have to pay the Liquidity Mining incentive for users to keep their liquidity.
- Protocols/DAOs can earn on liquidity trading fees.
- Protocols/DAOs can own their liquidity, not dependent on mercenary liquidity providers anymore
- Protocols/DAOs now own their liquidity, so price is more stable and volume will increase and better absorbs large trade.
- The liquidity is bigger over time and has no risk of user withdrawal.
- Bonding can be implemented on your own website.
- With Libero Smart Bond - Bonding as a Service, the road to self-sustainability and long-term growth is ready for any DAO/protocols that want to partner with us.
Protocols like OlymusDao has implemented it quite successfully and can grow their liquidity tremendously to hundred millions USD, but after a long time on the market, I see it has one serious drawbacks:
Because of the nature of bond is discount, interested users waited patiently for the opening of bonding periods to purchase the tokens instead of buying on the open market; So the price is not supported and the marketcap is stagnated.
We have found a solution and are happy to finally introduce LIBERO Smart Bond. For the first time in Defi history, a new smart model of Bonding that will combine the best of both worlds: open market buys that fuel price action and bonds to help treasury keep up. For the users this happens in the background as the Smart Bond will be implemented on our website directly and all the user has to do is choose the amount to buy LIBERO with.
If a user wants to purchase $1,000 of LIBERO and the ratio is set to 80/20 the following happens: The Smart Bond will route $800 dollars through PancakeSwap using the liquidity pair, and $200 though our Libero Bonds. The user chooses the amount and the Smart Bond contract handles the rest!
The picture above is just an illustration, initial ratio will be set to 80/20 where 80% is market buy & 20% is treasury buy. This number will be adjusted dynamically based on market situation.
This has multiple advantages:
- easy to use for the user
- treasury per market cap ratio grows close together
- team can regulate the buy/bond ratio at anytime
- price and treasury grow with every buy
—> Better than OlympusDAO Defi 2.0 old bonding model, for the first time ever we have LIBERO Smart Bond with best of both Defi 1.0 & Defi 2.0 worlds
All in all, we believe the implementation of our smart bond will benefit Libero Financial and its community greatly!
Last but not least, we are offering our Smart Bond as a very cost effective service to other protocols who believe their project could benefit from growing their treasury at a closer relation to their market cap without having to launch a new version of their contract.