Ripe Finance
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Ripe Finance

The Ripe Bonding mechanism

And the pursuit of capital efficiency

What is a Bond?

Olympus shout out (3,3)

How the Ripe Bonding Mechanism Works

  • Ripe operates on epochs. Each epoch lasts a certain number of Ethereum blocks. This allows the protocol to throttle bonding activity where/when needed, and to create an element of competition/scarcity.
  • The bond capacity is the maximum number of jUSD bonds that can be purchased in a given epoch. When that limit is reached, you’ll have to wait until the next epoch to buy a bond.
  • There’s a max discount. At the beginning of each epoch, the bond discount is 0%. The discount slowly, gradually, linearly goes up thru the duration of the epoch. The maximum discount is reached just before the end of the epoch. If you wait too long for that max discount, there may be no bond capacity remaining!
  • The bond assets are the assets that can be used for payment in bond purchases. This will mostly be blue-chip stablecoins (USDC, DAI, USDT) so that The Endaoment can be earning. But there may be occasions where the protocol absorbs other assets (LP tokens, Curve Wars tokens, etc).
  • The bond vesting length is how long it takes to be able to claim/withdraw ALL of the jUSD you purchased. Basically determines the maturity date of the bond.
  • There is also a parameter for linear vesting. If linear vesting is turned on, then the bond participant can claim the proportional jUSD thru the vesting period (half way thru vesting, they can claim half the jUSD).

Example: Alice buys a bond

  • Let’s say the max bond discount in the epoch is 20%. We are halfway thru the epoch, which means current bond discount is 10%. There is still plenty of bond capacity remaining for Alice.
  • Alice has 90 USDC and is searching for a strong, short term yield opportunity.
  • A 10% discount would mean that for every 1 jUSD bond that Alice buys, she would only need to spend $0.90 of her USDC.
  • Alice decides to participate in Ripe’s bonding program. She swaps her 90 USDC for a bond of 100 jUSD (10% discount).
  • The 90 USDC that Alice spent was immediately sent to The Endaoment where it started earning yield (perhaps unlocking yield for your Punk!).
  • Alice’s bond vesting length is 6 days and linear vesting is turned on. After 3 days, Alice can claim/withdraw 50 jUSD (half of her ultimate 100 jUSD payout).
  • Alice could stake her claimed jUSD (to earn part of the gains from The Endaoment) or sell it back to USDC in our curve pool.
  • Alice gets a juicy return! These returns are not realistic for Ripe in production, but hey it’s fun to dream!

Cost of Capital

Creating demand for Bonds

  1. Demand for jUSD: Bonding mechanism allows people to obtain jUSD at a discount. Why should people want jUSD? Where and how can we create demand for jUSD? We’ll go thru that in a future post.
  2. Peg of jUSD: If people know they can swap jUSD back to USDC at a very, very low cost (ideally 1:1), they’re much more likely to participate in bonds. We’ve already talked a little bit about our Endaoment stablecoin redemption mechanism. In a future post we’ll talk about our Curve Wars strategy, and how crucial it will be to have thick, fat liquidity in our jUSD stablecoin pool.
  3. Juice Score impact: This is basically Ripe’s loyalty program. The higher your Juice Score, the better your Ripe economics will be (yield, loan terms, etc). Bonding is one of the best ways to increase Juice Score. We’ll have a whole post dedicated to Juice Score soon.
  4. Ripe Token distribution: Okay you’ve come this far, you deserve some alpha. Ripe’s bonding program will be one of the primary mechanisms in which Ripe governance tokens get distributed. Beyond the promised jUSD in a bond, you’ll also get some $RIPE. This won’t be a forever thing, but a way to really create demand for bonding early and bootstrap The Endaoment. The Ripe token ($RIPE) — and how value accrues to it — will have its own dedicated post soon.



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