# Bond

### The Bond

Equation Finance is an algorithmic stable coin that is meant to be pegged to the value of 1 \$FTM. As the value of the peg is algorithmic, it’s common for the value of \$EQU to fluctuate to be both slightly above and slightly below the value of 1 \$FTM. When \$EQU has a value higher than 1 \$FTM, new \$EQU is distributed in the Boardroom. When \$EQU has a value lower than 1 \$FTM, the Boardroom stops distributing \$EQU and the Bond is instead open.

### Bond Issuance

\$EBOND are creating on each Epoch that the Boardroom operates on whenever 1 \$EQU < 1 \$FTM (Also called Contraction Phase). During these Epochs, the Bond issue 3% new \$EBOND of current circulating \$EQU supply. This happens on each Epoch until the Supply of \$EBOND is equal to 35% of the circulating supply. In simple terms, \$EBOND Circulating Supply < \$EQU Circulating Supply during an Epoch shift, then mint 3% new \$EBOND. However, \$EBOND can only be bought when 1 \$EQU < 1 \$FTM. \$EBOND TWAP is based on \$EQU price TWAP from the end of the last Epoch which means that \$EQU TWAP is current and \$EBOND TWAP isn’t.

### Incentives

Users who help the Equation Protocol to sustain its algorithmic peg to the chain’s native currency should be highly rewarded. There are two ways that \$EBOND get’s rewarded which can be chosen depending on personal preference.
While 1 \$EQU = 1 \$FTM - 1.1 \$FTM, you can trade back your \$EBOND at a ration of 1 \$EBOND = 1 \$EQU. Doing this have earned you the difference between buying 1 \$EBOND when \$EQU was below peg, and the current value of \$EQU.
While 1 \$EQU >1.1 \$FTM, you can trade your \$EBOND at a ratio of 1 \$EQU = 1 \$EQU + BONUS. Doing this have earned you the difference between buying 1 \$EBOND when \$EQU was below peg, and the current value of \$EQU + BONUS.
The BONUS yield for redeeming \$EBOND when 1 \$EQU is worth 1.1 \$FTM or above is calculating using a specific formula. The full redemption value would be: 1+[(\$EQU(TWAP)−1)0.7)] = \$EQU redemption value
Example of \$EBOND redemptions You burned 1 \$EQU for 1 \$EBOND when 1 \$EQU was worth 0.87 \$FTM. Current value of 1 \$EQU = 1.099 \$FTM. You exchange 1 \$EBOND to 1 \$EQU giving you a profit of 0.229 \$FTM. You burned 1 \$EQU for 1 \$EBOND when 1 \$EQU was worth 0.87 \$FTM. Current value of 1 \$EQU = 1.101 \$FTM. You exchange 1 \$EBOND to 1 \$EQU + BONUS giving you a profit of 0,231 + 0,115 = 0,346 \$FTM.
These examples illustrate that buying \$EBOND when \$EQU is below peg and redeeming them when \$EQU is above peg could provide a high % profit. Waiting to redeem \$EBOND until peg is higher or equal to 1.1 of the peg is extra profitable.