Dutch auction bonds

Automatic pricing

Dutch auctions address the most complicated part of creating bonds, pricing the premiums.

Instead of manually measuring risk, projects can decide to let the market price the bonds through a dutch auction, allowing premiums become a function of supply and demand.

How does it work ?

Lumio bonding mechanism allows for the pricing of any two tokens, which is not reliant upon any oracles. These bonds respond to the supply and demand, which in-turn offers a variable ROI to its users.

The Dutch auction bonds works as such:

The program will determine a high price, and begin incrementally lowering the price. The price continue to lowers until the ROI becomes attractive enough for a bidder to purchase the bond. Once the bond is purchased the price rises up again to a slightly lower hight than previously.

This will insure a perfect market price, where the bonders are receiving the highest ROI while the issuer receives the most capital against their tokens.