Adolescent 3Bonds

Mechanics, Rebates & Secondary Markets

To best understand the details provided below, please ensure you have read 3Bonds.

Overview.

Adolescent 3Bonds are the initial state of a bond purchased directly with crvUSD. Their core mechanics are defined by the rebate system, the path to conversion, and their role in a dynamic secondary market.

The Rebate Engine

The primary feature of an Adolescent 3Bond is its crvUSD rebate, which is streamed to the holder over 12 months from the date of purchase.

• Purpose: The rebate effectively lowers the entry cost for a creditor, providing an upfront yield to compensate for the delayed activation of full creditor rights.

• Calculation: The rebate rate is determined by a function that considers the number of bonds already held by the purchaser, incentivising larger and more committed positions.

• Claiming: Rebates are accrued linearly and can be claimed by the holder at any time by initiating a transaction.

The Conversion Process

After the 12-month rebate period concludes, an Adolescent 3Bond becomes inert. To activate its underlying value, it must be converted into an Aged 3Bond.

• Mechanism: The conversion is a permission-less transaction that burns the Adolescent 3Bond NFT and mints a new Aged 3Bond NFT.

• Triggered Event: This conversion triggers the protocol to mint the 10,000 GUILD backing and deposit it into the Single-Sided Lending Pool, formally activating the claim and making the holder eligible for ETH revenue distributions.

Secondary Market Dynamics (Stage 4)

Adolescent 3Bonds are designed to be liquid assets, fostering a vibrant secondary market that accelerates ecosystem growth.

• Primary Resellers: Entities holding a threshold number of 3bonds (currently set at 1,000) qualify for the maximum rebate rate on all future direct purchases from the protocol. This status also grants them the ability to act as market makers on the official secondary market.

• The Reseller Model: A Primary Reseller can purchase bonds with the maximum discount (currently fixed at 33%) and then stake them for resale on the secondary market at a dynamic price, offering a better discount (e.g. 28%) than what a new user could get directly from the protocol.

• Benefits for New Users: The secondary market provides a more attractive entry point for new creditors, who can acquire bonds with a significant immediate discount without needing a large existing position.

• Economic Incentive: Resellers profit from the spread between their purchase price and the sale price, plus any unclaimed rebate that has accrued on the bond, creating a powerful incentive to provide liquidity and bootstrap the market.

This system ensures a liquid and accessible path for all users to become creditors, from large institutions to individual participants, while rewarding early and deep commitment to the ecosystem.

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Rates.

Up to 33% on stables for 12 calendar months.

Rate impact variables.

The rebate received depends upon several variables. These variables are:

1. The Reserve's active RRC model (Reserve Requirement Curve). We have built several RRC models that are each applied to the Reserve as we achieve specific KPI goals; reflecting the growth and maturity of the project.

2. The applied KPI weight. This weight signifies how far along a curve we've progressed, based upon RRC model requirements. It is used to derive an 'applied' rebated based upon #3's variable input.

3. The number of 3bonds held by the purchasing wallet/contract. This variable accounts for preexisting Adolescent and Aged 3Bonds held AND the number which are about to be purchased, ensuring the highest rebate possible is awarded at the time of purchase.

Purchase breakdown.

3 assets come together at the point of a 3Bond purchase. These are:

1. The crvUSD used to initiate a purchase,

2. The GUILD required to satisfy the SSLP requirements and,

3. The 3bond receipt and proof of ownership.

On purchase, each is processed to satisfy specific functions within 3's core infrastructure. These functions have been described below for each asset:

crvUSD.

On purchase, the 10,000 crvUSD is used as follows:

• A 1% purchase fee is applied.

  • This fee (in crvUSD) is swapped for GUILD via the settlement contract.

  • The acquired GUILD is sent to, and accumulated by the Grove. (This action will over time benefit 3Fi token holders in several ways).

• A wallet specific rebate value is calculated and applied to the purchased 3Bonds.

  • Calculated and applied as a percentage to the 3Bond's purchase price, this balance secures the crvUSD required to guarantee the promised rebate.

• The balance = (10,000 - Purchase Fee - Rebate), is passed to the Arb. Master Node.

  • On receipt, the Arb. Master Node allocates the balance received to the active Arb. Engines, based upon their respective and assigned VW3 weight.

GUILD.

On purchase, 10,000 GUILD are issued/minted and sent to the SSLP.

Upon vesting an Aged 3Bond, the GUILD vested to owners is sourced from this SSLP.

Adolescent3Bond NFT.

On purchase and once the crvUSD and GUILD have been processed, an Adolescent 3Bond receipt will be minted and issued to the connected wallet/contract. Further...

• Upon issue, the rebate promised begins vesting immediately (within next 3 blocks).

• Upon issue, a 3Fi token allocation is assigned. Issued upon upgrade to Aged status.

• Upon issue, the receipt is available for onward use in compatible iNcubators.

Rebates.

As noted in Rates, a value derived from a static range has been applied at this time to service rebate requirements. This variable will later be replaced with one derived from a dynamic, supply and demand driven model.

Rebates are thus defined by the following formulae:

$$Rebate = W \times Y_a + (1-W) \times Y_b$$

Where 'Ya' and 'Yb' may each be expressed as:

$$Y = R_{max} \times \frac{1 - e^{-C \times B_w}}{1 - e^{-T_B \times C}}$$

Rebate = The amount to be returned, expressed as a percentage.

W = KPI-Weight at the time of execution.

e = Eulers number = 2.71828182845905

$C$ = the efficiency coefficients.

$C$ of Ya = $C_a$ = Max. KPI curve boundary.

$C$ of Yb = $C_b$ = Min. KPI curve boundary.

$B_w$ = Number of 3Bonds held by the purchasing wallet/contract.

$R_{max}$ = The static models maximum rebate, expressed as a number between 0 and 100.

$T_B$ = The Targeted number of Bonds held to obtain max rebate, expressed as a whole number.

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NFT details.

• Name: Adolescent3Bond,

• Address: [Contract address will be added here when deployed]

• Type: ERC721.

• Hard Cap: None (Infinite).

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