Removal of Bonds & Epochs

This thread can be used to discuss the removal of Epochs & Bonds in ARTH v2.

Bonds were first introduced by the Basis Cash team as a means of creating a system that could address a decline in demand by issuing debt to reduce the supply.

In theory, bonds happen to offer a well-stabilizing mechanism to help control the price; however, in practice, they have caused more harm than good.

As we’ve seen in the earlier days of ARTH v1, ARTH Bonds (ARTHB) creates a huge sell pressure that prevented the protocol from expanding when it actually had buy demand that could’ve grown it even further. Moreover, bonds were a debt that had to be repaid at a 20% premium, which means that ARTH supply had to outgrow even the premium for the protocol to be completely debt-free.

This makes it difficult to scale ARTH to the same extent as some of the more established stablecoins, that have managed to grow to a market capitalization of $1 billion+.

The new protocol will no longer have a need for epochs allowing the protocol to be much more flexible than the previous model.

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How would the protocol actually offer rewards for distribution without epochs.

As you have mentioned previously Steven, the price control mechanism through Epochs and Bonds theoretically sounded solid.

But the underlying problem here was that the average Joe did not understand what arth was and hence it being pumped to $3 and the subsequent crash which impacted investor confidence. This is while their was not much use case or utility for arth to create a buy wall at the pegged price.

However I feel the system would have behaved perfectly given the right circumstances , but it’s due to complexity in its behaviour that resulted in its failure. But it was best the this inherent flaw was figured out now than later right?

So my recommendation for ARTH 2.0 , is to keep it simple as possible and important being bug free.

Correct. I think moreover looking at concepts that have historically worked is the best way to move forward.

The protocol will accumulate fees from minting/redemption which are then given to all different kinds of stakers on the platform.

Fees are a much better way of driving revenue to stakers than minting seignorage because seignorage is essentially “too” much free money.