Bonds
Natural-ceiling perpetual bonds sold through Dutch auction. The stabilization mechanism that cannot become a death spiral.
Overview
When DING trades below peg, users can buy bonds by burning DING. This contracts supply. Bonds are perpetual, sold at face value through a Dutch auction.
Dutch Auction
The auction descends from PAR+10% APR to PAR over 24 hours. The auction determines the interest rate, not the price.
| Demand Level | Clearing Rate |
|---|---|
| High confidence | PAR + 1% |
| Moderate | PAR + 5% |
| Low confidence | PAR + 10% |
Crisis buyers — those who buy when confidence is lowest — are rewarded structurally because their bonds carry the highest rates and sit at the front of the queue.
20% Hard Ceiling
Total bonds outstanding cannot exceed 20% of circulating DING supply. When the cap is hit, auctions pause automatically.
This prevents the uncapped liability growth that destroyed Terra, where Anchor's 20% yield promise created an exponentially growing hole with no upper bound.
The 20% cap is a natural constraint encoded in tokenomics. It cannot be overridden by governance. It cannot be waived in an emergency. It is mathematics, not policy.
Redemption Queue
Highest-interest bonds are redeemed first. This creates a structural reward for crisis buyers:
- Buy bonds during stress (high rate)
- Bonds sit at front of queue
- First to redeem when revenue flows
DIWAN Treasury Backstop
If private bond demand is insufficient, the DIWAN Treasury stands ready to purchase bonds at auction. This creates a price floor for confidence: even if private buyers flee, the backstop remains.