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SBONDS FAQ

## "What are SBOND (Bonds)?"

Bonds are unique tokens that can be utilized to help stabilize SCARAB price around peg (1 SCARAB = 1 FTM) by reducing circulating supply of SCARAB if the TWAP (time-weighted-average-price) goes below peg (1 SCARAB = 1 FTM).

## "When can I buy SBOND (Bonds)?"

SBOND can be purchased only on contraction periods, when TWAP of SCARAB is below 1.
Every new epoch on contraction periods, SBONDs are issued in the amount of 3% of current SCARAB circulating supply, with a max debt amount of 35%. This means that if bonds reach 35% of circulating supply of SCARAB, no more bonds will be issued.
Note: SBOND TWAP (time-weighted average price) is based on SCARAB price TWAP from the previous epoch as it ends. This mean that SCARAB TWAP is real-time and SBOND TWAP is not.

## "Where can I buy SBOND (Bonds)?"

You can buy SBONDs if any are available, through skarab.finance, anyone can buy as many SBONDs as they want as long as they have enough SCARAB to pay for them.
There is a limit amount (3% of SCARAB current circulating supply) of available SBONDs per epoch while on contraction periods, and are sold as first come first serve.

## "Why should I buy SBOND (Bonds)?"

First and most important reason is Bonds help maintain the peg, but will not be the only measure use to keep the protocol on track. We also have a DAO fund which will step in and buy SCARAB to get it back to peg.
SBONDs don't have a expiration date, so you can view them as a investment on the protocol, because longterm you get benefits from holding bonds.

### Incentives for holding SBOND

The idea is to reward SBOND buyers for helping the protocol, while also protecting the protocol from being manipulated from big players.
So after you buy SBOND using SCARAB, you get 2 possible ways to get your SCARAB back:
1. 1.
Sell back your SBOND for SCARAB while peg is between 1 - 1.1 (1 SCARAB = 1 FTM) with no redemption bonus. This to prevent instant dump after peg is recovered
2. 2.
Sell back your SBOND for SCARAB while peg is above 1.1 (1 SCARAB = 1FTM) with a bonus redemption rate
The longer you hold, the more both the protocol and you benefit from SBOND.
Example:
1. 1.
When SCARAB = 0.8, burn 1 SCARAB to get 1 SBOND (SBOND price = 0.8)
2. 2.
When SCARAB = 1.15, redeem 1 SBOND to get 1.105 SCARAB (SBOND price = 1.27)
So, which one is better?
If I buy SCARAB at 0.8, and hold it until 1.15 and then sell, I'm getting +0.35$per SCARAB But, if I buy SCARAB at 0.8, burn it for SBOND, and redeem it at 1.15, I'm getting 1.105 SCARAB * 1.15 (SCARAB current price) = 1,271 (+0.47$) per SBOND redeemed.
But what if getting back to peg is taking too long ?
We are going to adjust our use cases, to have different behaviors on contraction and expansion periods to benefit SCARAB and SBOND holders when needed.

## "When can I swap SBOND for a bonus?"

SBOND TWAP (time-weighted average price) is based on SCARAB price TWAP from the previous epoch as it ends. This mean that SCARAB TWAP is real-time and SBOND TWAP is not. In other words, you can redeem SBOND for a bonus when the previous epoch's TWAP > 1.1.

## "When can I swap $SCARAB for$SBOND?"

$SBOND will only become available in the Desert following epochs in which the Time Weighted Average Price (TWAP) of$SCARAB is under peg. This means that $SCARAB's price will have had to have been under 1$FTM per 1 $SCARAB for the majority of the previous epoch in order to trigger the Desert to "open". The Desert will always open at the very beginning of a new epoch, and remain open for the entire epoch — the Desert can not and will never open mid-epoch — and during epochs in which the Desert is open,$SCARAB will not be printed in the Temple.

## "What is the formula to calculate the redemption bonus for $SBOND?" To encourage redemption of$SBOND for $SCARAB when$SCARAB's TWAP > 1.1, and in order to incentivize users to redeem at a higher price, $SBOND redemption will be more profitable with a higher$SCARAB TWAP value. The $SBOND to$SCARAB ratio will be 1:R, where R can be calculated in the formula as shown below:
$R=1+[(SCARABtwapprice)-1)*coeff)9)]$
$coeff = 0.7$

There is a balanced state "at peg" when $SCARAB's TWAP is between 1.00 and 1.01, and this means there is neither contraction nor inflation. ## "When can I swap$SBOND back to $SCARAB?" You can swap it back again when the following two criteria are met: 1:$SCARAB TWAP is above peg and
2. There is enough in the treasury to cover it the redemption.