Overview

A user deposits ETH into the protocol and creates a bond. The bond is represented as an ERC-721 NFT which represents the bond amount, time of creation, accrued value & bond status in the metadata of the NFT.

The funds deposited for creating are bond are directed to a Pending bucket and staked in a basket of LSDs and the bond accrues the boosted token lcdETH as a virtual balance. The accrual rate or how fast/slow the bond accrues lcdETH is depending on a bonding curve.

After creating a bond, a user has the option to bond in where they receive the amount of lcdETH accrued in the bond by forfeiting the initial principal amount which they initially deposited. Every time a user bonds in, new lcdETH in minted.

This ETH + staking yield then is directed toward the reserve bucket which acts as the backing for lcdETH.

At any point after bond creation, a user has the option to cancel the bond or bond out, which will return the initial principal amount deposited and the yield generated from the ETH will be directed towards Reserve Bucket. So at any point in time, the principal amount is essentially protected.

If a user decides to bond in they get lcdETH, which they can either choose to sell on the open market for ETH or redeem for ETH from the protocol.

What are the different system buckets?

The ETH deposited in the protocol is in either one of the following buckets

• Pending Bucket: Receives ETH from user deposits and is distributed in a basket of LSDs. The yield generated from the pending bucket is credited to the Reserve Bucket.

• Reserve Bucket: Backs the total lcdETH supply. lcdETH is fully redeemable for the underlying ETH in the Reserve Bucket.