CVI’s GOVI bonding campaign- get GOVI cheaper than the current market rate
Potential 2–10+% discounts on the GOVI token
Just yesterday the Crypto Volatility Index (CVI) announced its Bond Protocol (previously Olympus Pro) liquidity bonding campaign for its Theta Vault.
People often find the mechanics of how this works a little confusing to wrap their head around, but its really rather simple and is an opportunity to buy (short-term vested) GOVI at less than the current market rate. This guide will show you how!
Table of Contents
- What is the bond program?
- How do I bond for cheaper GOVI?
- The discount cycle (hint: the discount amount varies over time and can sometimes even be a premium, so watch out!)
What is the bond program?
Firstly, the bond program is simply a way for the CVI protocol to own some of the liquidity inside its Theta Vault by getting vault depositors to trade some of their USDC LP (liquidity provision) tokens for discounted GOVI (from the protocol reserves) released on a short vesting schedule.
It’s of interest for the protocol to do this because then some of the TVL inside the vault is “sticky”, whereby it doesn’t attempt to enter and flee the vault according to market conditions, giving CVI traders a consistent base of capital to trade against and reducing the variation in risk for other vault depositors.
It also allows the protocol to gain revenue from its own share of the vault deposits- for instance had the vault owned $1 million of its own liquidity, it would have made around $90k in fees in the last quarter- allowing the protocol to grow its wealth and provide an ever increasing base of consistent capital over time for users to trade against in the vault.
How do I bond for cheaper GOVI?
Doing so is remarkably easy.
You need only deposit some USDC into the Theta Vault and make a few clicks on the CVI’s new bonding page and you’re done.
However there are a few idiosyncrasies to the bonding process that you need to understand, chief of which being that the discount amount can vary over time, and even be a premium- so you have to be careful and understand the numbers and how the bonding cycle works!
Firstly, the Theta Vault is only deployed on V3 of the CVI on Arbitrum, so you’ll need to get some USDC into an Abitrum compatible wallet, for instance MetaMask.
Then head over to the Vaults page of the CVI protocol https://cvi.finance/vaults and deposit your desired amount of USDC.
You can deposit as much as you want into the Theta Vault, but bear in mind there is a cap to how many USDC LP tokens (called T-CVI-LP) you can bond for GOVI in one go, which currently stands at 2684 GOVI’s worth, however much that may be (including any discount).
That said, you do not need to deposit the exact amount you wish to bond.
You could for instance deposit 5000 USDC into the vault, for which you receive T-CVI-LP tokens in your wallet. You could then bond part of these right away, and part of these later, or never at all, keeping ownership of some of your vault liquidity.
Once you’ve deposited your USDC into the vault and received T-CVI-LP (if you actually want to be able to see these in your wallet, the contract address to add is 0xFDeB59a2B4891ea17610EE38665249acC9FCC506 -but you don’t need to be able to) head over to the Bond Protocol bonding page which can be found on the CVI homepage, or with the link underneath the image.
You should arrive to a screen that looks approximately like this:
Press on “view” in the bottom right and you will arrive to this page:
This page has all the important information.
The most important numbers are “Current Discount” and “Max Bondable”.
Max Bondable is the most T-CVI-LP you can bond for GOVI in one transaction. Note it is not 1 for 1 with USDC- each T-CVI-LP is currently worth around 1.1 USDC.
The “Vesting Term” is always 14 days, which means you will receive all your GOVI 14 days after approving the bond.
You can go ahead and connect your wallet, select an amount of T-CVI-LP to bond for vested GOVI and approve the transaction and you are done- you will have all your GOVI in 14 days.
BUT remember the discount varies over time and a red and negative number like in the screenshot above actually indicates a premium (you would be paying more per GOVI than usual), whereas you want to see a green (positive) number for a discount.
The Discount cycle
The premise of the bonding cycle is very simple. The campaign begins by offering a mild discount of ~2%.
Anyone can choose to bond T-CVI-LP for GOVI up to the single transaction limit at any point in time.
However whenever they do so, the discount amount on offer for everyone immediately decreases. The amount it decreases by depends on how much GOVI was claimed.
If the maximum amount of 2684 GOVI was claimed, the discount drops by ~20%. So if the discount was 2% and someone claims all the GOVI, it drops to ~-18% (a significant premium).
Then slowly over time the discount resets back upwards, so after a short while it will be -17%, then -16% … then eventually 0%, and back into actual discount territory- +1%, +2% … +5% … +10% and so on.
The discount increases forever until someone chooses to purchase the bond, so essentially the whole process becomes a game of chicken whereby you want the discount to become as great as possible by leaving it alone, but you also need to claim it before someone else decides the discount is satisfactory and resets the discount amount downwards.
In this way market participants effectively set the attractive discount rate by when the bond is typically claimed based on their own behaviours and perception of value.
The exact numbers for the drops and speeds of reset have not been shared and thus are publicly unknown, but initial observations do imply a roughly 20% drop for a maximum bond claim, and ~36 hours to recover this 20% discount amount- in other words around a 36 hour effective bonding cycle.
Of course no one will rationally bond for any GOVI whilst it is a price premium, and you might argue that significant recent price pumps might necessitate a higher discount for the bond to be attractive, as the probability of a pull-back increases and the GOVI bonded for is vested for 14 days. On the flipside though, after steeper pullbacks in price, a smaller discount in the bond value might become sufficiently attractive as the general probability of a price rebound increases.
The campaign is set to run until approximately 25k T-CVI-LP tokens have been bonded for GOVI.
So until then, hopefully you now fully understand how the bonding process works, and happy hunting the maximum discount you can find!
