Karma Bond

Karma Bond mechanics

  1. 1.
    A user bonds LP tokens (e.g. Token X/stable coin).
  2. 2.
    LP tokens go to the Karma Bond contract and are distributed to the corresponding protocol treasury contract.
  3. 3.
    The Karma Bond contract receives the protocol token at a discount from the protocol treasury.
  4. 4.
    The discounted protocol tokens are issued to the user based on the vesting period (e.g. 5 days).
  5. 5.
    The Karma Bond service charges a 3.3% fee on the protocol token pay-out.
  6. 6.
    The fee is sent to the Karma Finance Treasury.
  7. 7.
    The 3.3% fee charged by Karma Bond is quoted against a price oracle to determine the fee’s USD value. For every 1 USD worth of fees, 1 bKARMA is minted. 90% of the bKARMA minted goes to the user.
  8. 8.
    10% of the bKARMA minted goes to the early contributors.
Example: Julie’s LP tokens generate 30 USD worth of fees for Karma Bond. Julie is rewarded with 27 bKARMA in addition to the discounted protocol token. The Karma early contributors receive 3 bKARMA.