💰Bonds

This page explains the concept of bonds within the Kuza framework.

Bonds

In essence, bond is a fixed-income instrument that represents a loan made by an investor to a borrower.

In the case of Kuza, the mechanics differ slightly from traditional bonds.

We find:

• the issuer: Kuza's treasury

• the principal: the purchased $QE token amount

• the maturity: the date at the end of the vesting period (15 epochs = 5 days period) on which the $QE amount can be redeemed

• the interest rate: which is fixed from the moment the bond is purchased, and represents the difference between the market value of the $QE received at maturity, and the amount deposited in the bond. This interest rate follows the supply/demand rule and can vary until you purchase a bond.

For example:

• Let's imagine that 1 $QE is worth $1 on the market. On the Kuza Finance website, it is possible to buy a bond to acquire $QE at $0.9, in exchange for $AVAX, i.e. a 10% discount (which represents the interest rate). If you decide to buy this bond, you can, for example, deposit $10 of $AVAX and in exchange receive $11 $QE at the end of the vesting period (5 days period). If $QE is worth more than $0.9 on the market after 5 days, you're essentially in profit, and vice versa.

Purchase a bond: To purchase a bond, you must first ensure that you have the required asset or LP token. Then, you need to go to our website in the "Bond" section. The protocol will quote a discount or premium depending on supply & demand for this specific bond. If you accept, simply deposit the right asset or LP token to the treasury and receive the corresponding $QE amount after 5 days.