Bonds and $OPEN mint
OpenFi mainly offers two types of bonds to mint $OPEN: liquid bonds and reserve bonds.
Liquid bond sales
The act of OpenFi users using OPEN/USDT LP to trade with the OpenFi protocol is referred to as "buying liquid bonds". Through this process, the protocol gains ownership of the LP while the user loses ownership.
In exchange, users purchase more $OPEN at the transaction price. The protocol then calculates the risk-free value (RFV) of the LP in terms of $OPEN quantity, as it has now obtained ownership.
RFV = (LP / Total LP) * 2sqrt(Constant Product) {Constant Product is the constant product of this LP}
Executing Price = RFV / Premium {Premium ≥ 1}
Premium = 1 + (Debt Ratio * BCV)
{BCV is the inflation rate determined by the protocol}
{Bonds Outstanding: number of bonds outstanding}
Debt Ratio = Bonds Outstanding / $OPEN Supply
ROI = OPEN transaction price∗ Executing Price LP actual price−1
ROI = OPEN transaction price∗ RFV LP actual price ∗ Premium−1
Liquid bonds give users a corresponding percentage discount, users have a corresponding percentage of ROI when they buy bonds. The bigger the discount, the higher the rate of return. The bonds have a vesting period of 5 days. After the vesting period ends, the user gets $OPEN, and this process is irreversible.
The bond premium is determined by the number of bonds outstanding. The fewer bonds outstanding, the lower the bond premium. The higher the bond's executing price, the greater the return rate (higher discount) for the user to purchase the bond, thereby increasing their motivation to do so.
Reserve bond sales
Users can purchase reserve bonds using tokens on a whitelist, namely $USDT, $USDC, $WBTC, $ETH, and $UNI, to mint $OPEN. These tokens are owned by the protocol. As a result, users receive more $OPEN than they would if they purchased them directly from the market.
Reserve bonds provide users with a proportional discount and have a 5-day vesting period. Once this period ends, users receive their $OPEN tokens, which is an irreversible process.
When users use USDT LP to purchase reserve bonds, the protocol does not need to evaluate the risk-free value and mint 100% of the $OPEN according to the funds it receives.
For example, if LPs worth $2,000 purchased liquid bonds to mint $200 OPEN, users with USDT worth $2,000 can purchase reserve bonds to mint $2,000 OPEN (with a $1 OPEN support price).
The discount for single-token assets in non-stablecoin pools is affected by the weight of the pool. When the actual weight exceeds the target weight, it indicates that the token in the pool has exceeded its expected value. Therefore, the discount for minting $OPEN for that token will decrease.
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