Chicken Bonds
BondOctober 4, 2022
Hi everyone, the wait is finally over, Chicken Bonds is now live. Here's a quick primer on the things that you can now do, and what to expect for the coming weeks:
You get bLUSD which gives you access to an amplified yield compared to depositing your funds directly into the Stability Pool. And bonding is the only way to mint a generative Dynamic Chicken Bonds NFT. At start, while bonding, your NFT will be an egg. Once you Chicken In or Chicken Out, your NFT will change into either a Chad-Chicken or a Runaway-Chicken. See below how you can increase chances to get a rare NFT.
It is backed by the Reserve Bucket which receives and auto-compounds the yield from users bonding as well as the entire POL yield (see our post about the yield amplification). bLUSD can be always redeemed against LUSD in the Reserve. That way the backing and the bLUSD price floor are ever increasing.
To create a bond, you’ll need some LUSD. You can obtain LUSD by opening a Trove on Liquity and borrowing LUSD against your ETH, or purchasing it on a DEX such as Curve or Uniswap.
You can now create a bond using one of the several front ends that are currently live. The minimum amount needed to create a bond is 100 LUSD.
When creating a bond users will receive a Dynamic Chicken Bonds NFT that will be visualized by a generative egg visual (view them on OpenSea). The ERC-721 NFT represents the bond and is tied to the deposited assets, like Uniswap V3 LP NFT. By selling the egg NFT the user transfers also all related assets, be mindful of that!
As with Liquity, Chicken Bonds run on completely decentralized frontends. You can find a list of frontends that support Chicken Bonds on our website.
Please be aware of scams. A legit front end will never ask you for your seed phrase. We recommend using the frontends listed on the Chicken Bonds website.
The Dynamic Chicken Bonds NFT will have some random traits, and some that are influenced by on-chain parameters. You can increase the chances of receiving a rarer NFT by depositing a larger amount of LUSD into the bond, and additionally if your address meets one or more of these criteria:
We will release more details shortly on the artwork and traits of the Dynamic Chicken Bonds NFTs.
We expect that your bond should break even after ~15 days and that an optimal re-bonding time could be reached at around 30 days. There are several strategies you can pursue and which might influence your Chicken In timing. As your bLUSD accrues over time, you will have to decide e.g. if you want to:
There is a 3% fee charged when a bonder Chickens In and claims their bLUSD. This fee is charged in LUSD, and is sent to the Curve gauge as a reward for LPs in the bLUSD/LUSD-3CRV pool.
You can Chicken Out at any time and retrieve your principal as long as you haven’t Chickened In (see risks below).
By using Chicken Bonds you are subject to the smart contract risks of the Chicken Bond protocol as well as all its dependencies such as B. Protocol or Yearn.
There are also economic risks as the market value of bLUSD is volatile - it can go up or down, but it always has a lower bound equal to the bLUSD redemption price. The system further relies on B. Protocol to sell Liquity’s liquidation gains (in ETH) back to LUSD, involving additional price risks.
For more details see What are the risks associated with LUSD Chicken Bonds?
Yes, the Chicken Bond system has been audited by Coinspect and Dedaub. See the audit reports on our GitHub.
And these are the smart contract addresses of the Chicken Bonds system:
Please check out our User Docs which will give you an in depth fundamental understanding of how Chicken Bonds works.
For additional information, please check out our blog which covers a list of topics like:
Bonders, it's time to get ready for a game of Chicken!
