In ESD, buying "bonds" is a speculative process. If ESD fails to break above $1 and repay the debt before the bond's expiration, it means all the ESD invested to purchase the bonds will be lost. If the bet is correct, investors can reap substantial profits, including:
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The difference between the ESD trading price (below par value) and $1;
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Additional ESD earned through "coupon" discounts.
Benefits of "Bonds" for ESD:
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Self-created demand: Investors who purchase "bonds" can create their own demand. ESD believes only those with substantial capital can effectively use "bonds": they buy tokens to drive up the price and keep it above the peg until the debt is repaid and the bonds are redeemed.
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Burning ESD: If, after purchasing "bonds," the ESD price fails to return above $1 and repay the debt before the bonds expire, the ESD used to buy the bonds is effectively burned, thereby increasing the ESD price and achieving stability.
ESD is more like a system that combines algorithms with incentivized user behavior to achieve price stability. Therefore, ESD "bonds" are not suitable for small investors.
AMPL is the pioneer of algorithmic stablecoins, and ESD is an improved version based on AMPL. In AMPL, all participants experience Rebase-driven inflation and deflation, i.e., fluctuations in quantity and price. In contrast, ESD's rebase is designed more for large holders, keeping the quantity and price of ESD stable for ordinary holders.
