Karma Bond mechanics

1. A user bonds LP tokens (e.g. Token X/stable coin).

2. LP tokens go to the Karma Bond contract and are distributed to the corresponding protocol treasury contract.

3. The Karma Bond contract receives the protocol token at a discount from the protocol treasury.

4. The discounted protocol tokens are issued to the user based on the vesting period (e.g. 5 days).

5. The Karma Bond service charges a 3.3% fee on the protocol token pay-out.

6. The fee is sent to the Karma Finance Treasury.

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. 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.