Bonding for $TLX

An alternative way of redeeming leveraged tokens

TLX allows users to bond their leveraged tokens for $stTLX at a discount, as an alternative to redeeming against the underlying asset. The leveraged tokens collected in this process are designated as protocol-owned liquidity, enhancing liquidity management within the system.

What is bonding?

Bonding your leveraged tokens for $stTLX is a way of acquiring $stTLX at a discount against the market rate. The discount starts negative but increases slowly over time. The discount will continue to increase until the next user bonds. When a user bonds the discount will decrease back down. Keep a close eye on the bonding discount to try to find an optimal time for bonding.

How does bonding work?

The TLX bonding mechanism is implemented using a base amount of $sUSD, that at any point can be bonded for the whole amount of bondable $stTLX. The amount of bondable $stTLX starts at zero and increases linearly per second. In a bonding event, the available amount of $stTLX decreases by the respective amount, the discount decreases respectively, and bondable $stTLX continues accruing.

The amount of $stTLX received can be expressed as:

$stTLX received = (bondable $TLX / base amount) $sUSD value bonded

The base amount can be updated.

Example

Base amount = $15,000

1 $TLX = $0.1

Accumulation pace = 0.7 $TLX / sec

Parameters are for exemplary purposes only

Given these exemplary parameters, bonding would become profitable 59.52 hours after the beginning of the cycle.

$15000$0.1×0.7×60×60=59.52 hours\frac{\$15\,000}{\$0.1 \times 0.7 \times 60 \times 60} = 59.52 \text{ hours}

After three days, the accumulated value of $TLX that could be bonded for $15,000 would be worth $18,144 (181,440 $TLX), which is equivalent to a 17.33% discount.

$0.1×0.7×60sec×60min×24h×3days=$18144\$0.1 \times 0.7 \times 60 \, \text{sec} \times 60 \, \text{min} \times 24 \, \text{h} \times 3 \, \text{days} = \$18\,144
$18144$15000$18144×100=17.33%\frac{\$18\,144 - \$15\,000}{\$18\,144}\times 100 = 17.33\%

Leveraged tokens worth $1,000 could therefore be bonded for $1,209.60 worth of $stTLX.

Note that in this case only a portion of the base amount would be bonded. The amount of bondable $stTLX would decrease, but the ratio at which $stTLX would be bonded would still be based on the constant base amount. Hence, the available discount at this point would have decreased to 11.42%.

$18144$1209.60=$16934.40(value of the remaining bondable $stTLX)\$18\,144 - \$1\,209.60 = \$16\,934.40 \quad (\text{value of the remaining bondable } \$\text{stTLX})
$16934.40$15000$16934.40×100=11.42%\frac{\$16\,934.40 - \$15\,000}{\$16\,934.40} \times 100 = 11.42\%

For more information regarding protocol-owned liquidity, please refer to the designated section:

Protocol-owned Liquidity

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