Inverse Bonds

For Reserve currency DAOs

Inverse bonds are being introduced for protocols and projects that have a asset-backed token.

This inverse bond will allow the DAOs to repurchase the token for the underlying assets backing it in the treasury.

Lets take an example to better understand this specific type of bond.

Lets say token XYZ has a supply of 10 XYZ tokens and a treasury of 100USDC. This would mean that each XYZ token is backed by 10USDC.

Now if the market value of XYZ drops to 9USDC, the market value is bellow the value backing the token. XZY protocol wishes to fix this.

They decide to implement inverse bonds. This states that all users can collect 10USDC per XYZ token. So holders decided to sell some of their XYZ in return for more than the market value. The protocol burns the tokens and now the backing price is equal or more than the market value.