Bonds & Contraction
EBOND will only become available in the following epochs in which the Time Weighted Average Price (TWAP) of EMP is under peg. This means that EMP's price will have had to have been under 1 ETH per 4000 EMP for the majority of the previous epoch in order to trigger the Bond emission to "open".
The Bond mint will always open at the very beginning of a new epoch, and remain open for the entire epoch — the Bond mint cannot and will never open mid-epoch — and during epochs in which the Bond mint is open, EMP will not be printed in the boardroom.
To encourage redemption of EBOND for EMP when EMP's TWAP > 1.1, and in order to incentivize users to redeem at a higher price, EBOND redemption will be more profitable with a higher EMP TWAP value.
To further illustrate why the longer you hold EBOND the more profitable it is, let's take an initial $1000 investment into consideration. In this example, say this $1000 is used to buy EMP when EMP TWAP is 0.95 and then swapped for EBOND. If these EBOND are redeemed when: -EMP TWAP is 1.5, your investment would now be worth $1421. -EMP TWAP is 2, your investment would now be worth $1789. -EMP TWAP is 3, your investment would now be worth $2526. -EMP TWAP is 5, your investment would now be worth $4000.
There is a balanced state "at peg" when EMP's TWAP is between 1.00 and 1.01, and this means there is neither contraction nor inflation. We call this the "Zen Phase".
You can swap it back again when the following two criteria are met:
1: EMP TWAP is above peg and
2. There is enough in the treasury to cover the redemption.