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# Bond Mechanism

USBD can only be purchased if USCD is less than 1 USDC (\$1) at the beginning of a cycle, at which point the BANK will cease minting new USCD. USBD can only be purchased in conjunction with USCD.
When the price is less than the peg, each USBD token symbolizes at least one USCD token that has been burned. The following rate applies when exchanging USBD for USCD:
1 USBD = [min(1.3;p)]^2 USCD
With p = USCD's price at the time of the swap.
The technique described above ensures that consumers can trade USBD for USCD with a maximum bonus percentage of 69% by comparing the current price of USCD to 1.3 and select the lesser of the two amounts.

### So what is the best way to trade USBD?

To make it easier and clearer, we will take a quick look at a few prime examples as follows:
USCD = \$0.98
USCD recovered to \$1.08
USCD recovered to \$1.45
• p = 0.98
• Assume total supply of USCD in this cycle = 200,000
• 1 USBD = [min(1.3;p)]^2 = [min(1.3;0.98)]^2 = 0.9604 USCD
-> 1,000 USCD can be used to acquire up to 1041.2328 USBD
For this cycle, the maximum amount of USBD that can be acquired by a single user is 6,000 (3% of total USCD supply).
*Numbers might differ slightly in real world applications.
• p = 1.02
• Assume total supply of USPD in this cycle = 200,000
• 1 USBD = [min(1.3;p)]^2 = [min(1.3;1.08)]^2 = 1.1664 USCD
-> You can swap 1,000 USBD for up to 1,166.4 USCD (a minimum 16 percent gain compared to arbitrating from \$1).
*Numbers might differ slightly in real world applications.
• p = 1.45
• Assume total supply of USCD in this cycle = 200,000
• 1 USBD = [min(1.3;p)]^2 = [min(1.3;1.45)]^2 = 1.69 USCD
-> You can swap 1,000 USBD for up to 1,690 USCD (a minimum 69 percent gain compared to arbitrating from \$1).
*Numbers might differ slightly in real world applications.
Even though USBD can be swapped for USCD at any moment, please be noted that swapping while USCD is below the peg will result in a net lost with the various selling taxes. This is to ensure we can maintain the stability of our ecosystem:
• 0.5% when USCD >= \$1;
• 5% when USCD < \$1;
• 10% when USCD < \$0.85;
• 20% when USCD < \$0.7;
• 30% when USCD < \$0.55;
• 40% when USCD < \$0.4.
USBD do not have an expiration date, hence they can be viewed as an investment in the protocol, as holding bonds provides long-term rewards.
USBD TWAP is based on the USCD price TWAP as the previous epoch ends. This indicates that USCD TWAP is real-time whereas USBD TWAP is not and is only updated AFTER an epoch has concluded.