Inverse Bonds – User Guide
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Inverse Bonds – User Guide

Published Wed Jul 06 2022

KlimaDAO is making inverse bonds available in order to demonstrate that the protocol is prepared to stand behind the backing value of KLIMA even during challenging periods. For a deep dive on the intention of inverse bonds, check out this explainer.


Why would a KLIMA holder want to carry out inverse bonding?

Similar to regular (i.e. external) bonds, discounts on inverse bonds are dynamic and set by the market. In periods of positive discounts, you receive a higher discount when you bond rather than normal trading.


As an example, instead of trading in the KLIMA/USDC pool, suffering slippage and trading fees, a KLIMA holder who is looking to exit could exchange KLIMA directly with the protocol for USDC at a dynamic discount rate dictated by capacity and demand (for example, assuming 100 KLIMA trades for 550 USDC on SushiSwap, 100 KLIMA bonds for 561 USDC via inverse bonding, providing a 2% discount).

How can I inverse bond KLIMA for USDC?

1) On the KlimaDAO bonding page, select ‘KLIMA (inverse)’

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2) On the bonding dashboard, enter the amount of KLIMA you wish to bond. The dashboard will reflect how much USDC you can expect to receive based on the amount of KLIMA entered.

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3) Approve the bonding transaction by clicking on ‘Approve …’

Note: You will only have to do this the first time you approve a transaction for an inverse bond. This is not the actual transaction for bonding.

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4) Execute the bonding transaction by clicking on ‘Confirm’. Congratulations, you have successfully bonded KLIMA for USDC!

Note: Unlike regular bonds, there is no vesting period for USDC inverse bonds and therefore settlement is instant.


Explainers for terms found on the inverse bonding dashboard

Premium: The difference in the amount you receive via inverse bonding as compared to swapping KLIMA in the open market.

Capacity: The total amount of USDC available in the inverse bond contract.

Maximum: The maximum amount of USDC you can acquire if you bond at this instant.


What should I look out for?

If the premium is negative, bonding is not profitable at the current time.

Stay up to date

As the Policy Team will be monitoring the impact of the current inverse bonding experiment and subsequently publishing an analysis of its effectiveness, look out for first-hand updates that will be published across our social platforms.

Disclaimer:

The information provided in this blog post pertaining to KlimaDAO (“KlimaDAO”), its crypto-assets, business assets, strategy, and operations, is for general informational purposes only and is not a formal offer to sell or a solicitation of an offer to buy any securities, options, futures, or other derivatives related to securities in any jurisdiction and its content is not prescribed by securities laws. Information contained in this blog post should not be relied upon as advice to buy or sell or hold such securities or as an offer to sell such securities. This blog post does not take into account nor does it provide any tax, legal or investment advice or opinion regarding the specific investment objectives or financial situation of any person. KlimaDAO and its agents, advisors, directors, officers, employees and shareholders make no representation or warranties, expressed or implied, as to the accuracy of such information and KlimaDAO expressly disclaims any and all liability that may be based on such information or errors or omissions thereof. KlimaDAO reserves the right to amend or replace the information contained herein, in part or entirely, at any time, and undertakes no obligation to provide the recipient with access to the amended information or to notify the recipient thereof. The information contained in this blog post supersedes any prior blog post or conversation concerning the same, similar or related information. Any information, representations or statements not contained herein shall not be relied upon for any purpose. Neither KlimaDAO nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this blog post by you or any of your representatives or for omissions from the information in this blog post. Additionally, KlimaDAO undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed in this blog post.