How Bonds Work on Neptune Mutual

Neptune Mutual explained how to supply liquidity to DEXes and get discounted NPM tokens.

With Neptune Mutual, users can supply liquidity into a decentralised exchange (DEX) by adding a DAI-NPM pair.

In return, users get a proof of deposit (POD) token they can use either to reclaim the DAI/NPM liquidity they supplied, or to exchange it for discounted NPM tokens in the Neptune Mutual bond pool. On the platform, you can find this functionality in the Bond tab.

Let’s find out why one might want to supply liquidity to a DEX and potentially exchange liquidity pool (LP) tokens for NPM tokens:

How Do Neptune Mutual Bonds Work

Neptune Mutual’s Bond feature lets you exchange a certain amount of DAI/NPM liquidity you’ve supplied for discounted NPM tokens.

To purchase a bond on the platform, you have to supply DAI/NPM liquidity to any DEX available on Neptune Mutual. In exchange, you get rewarded a fee based on all trades that follow after you supply liquidity to the pool. The amount of fees you receive is proportional to the amount of DAI/NPM liquidity you supplied in comparison to the total amount of liquidity in the pool.

After you’ve supplied liquidity to the DEX, you can reconvert your LP tokens back into DAI/NPM tokens.

If you want to “sell” DAI/NPM liquidity in the Neptune Mutual bond pool, you need to exchange your LP tokens in the Neptune Mutual bond pool in exchange for NPM tokens.

When you commit LP tokens to the bond pool, the discount on the price of these tokens, the bond price, is correlated to the current market price of NPM tokens.

The combination of the number of NPM tokens you receive along with the bond price will determine the ROI estimate calculated at the time of the transaction.

About Neptune Mutual

Neptune Mutual is a cover protocol that enables users to purchase cover policies to protect their digital assets from hacks and exploits. The protocol uses parametric cover as opposed to discretionary insurance. It has an easy and reliable on-chain claim process. This means that when incidents are confirmed by our community, resolution is fast and payouts to all cover policyholders are guaranteed.

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https://medium.com/neptune-mutual/how-bonds-work-on-neptune-mutual-40d0aaf6edb7