Galaxy Marketplace

What is the Galaxy Marketplace?

The Galaxy Marketplace is a brand-new way of earning tokens from investors which is similar to bonding, which is a fundamental part of many projects, most famously Olympus DAO. However, the way “bonding” in this case is conducted is different from Olympus and its many forks. Bonding in Sphere Finance will serve a similar purpose as bonding in conventional DeFi projects, but sculpted in a way that accommodates whales in a way where they are not only necessary, but also healthy to the protocol, becoming a source of wealth creation for the treasury which supports the Perpetual APY provided to investors.

How does bonding work in Olympus DAO?

The way bonding works in Olympus is very simple:
  • The protocol issues bonds for LP (Liquidity), RFV (Risk Free Value), or assets it wishes to acquire and offers people who provide the tokens discounted OHM tokens in exchange for “selling” them the tokens. This is known as bonding or (1,1).
  • After a vesting period, the bonder can take their OHM tokens & stake them or sell them.
The mechanic put in place is a fast & revolutionary way to amass large amounts of liquidity & RFV, however bonding does not come without its flaws.
The main issue of bonding is the way it can be abused by “bond-flippers”, people who partake in the game theory and continuously buy assets, bond them for discounted OHM tokens, sell their rewards and repeat the process until it is no longer profitable. This negatively affects the protocol because by bond-flipping the circulating supply of tokens is regularly diluted alongside the rebases, because the protocol always mints new tokens to offer for bonds. Stakers who keep staking their tokens always lose out on their share of the market cap, which keeps shrinking because of this repeated process of minting tokens & putting them back into circulation by way of selling.

How does Sphere solve this problem?

Sphere offers Kinetic bonds, but does not mint any new $SPHERE tokens to reward bonders. Rather, the protocol offers bonds for large holders for a lower tax and uses the $SPHERE earned from the bond to redistribute in the form of bonds for a number of assets which the protocol needs at a lower buy tax.

Where do you get discounted $SPHERE tokens?

The tokens we give as rewards to bonders come from our Kinetic Bonds. Bonds for whales who wish to sell a part of their $SPHERE portfolio at a lower tax rate for stables. The $SPHERE tokens earned from these kinetic bonds are then redistributed to bonders at a lower buy tax, depending on which tokens we need. This could be governance tokens (CRV, QI, Tetu, DYST), RFV, WMATIC, etc. This way, we both amass tokens we wish to use in our investment fund & do not dilute our circulating supply, because it is not profitable to bond flip $SPHERE (sell $SPHERE at 20% tax to buy at a 1%* discount). This means that only new investors can affordably bond $SPHERE. Simply put, it is a way to make an investment without spending much of anything.
Galaxy Marketplace Flowchart

What are the pros and cons of Kinetic bonds as opposed to conventional bonds?

Pros:
  • There is no inflation when issuing bonds - since we are not minting any new tokens, but rather recycling the ones we issued to whales who wish to sell their tokens without affecting the liquidity of $SPHERE, we do not need to create new tokens to distribute to new investors who will provide us with tokens we wish to include in our investment treasury.
  • It allows for passive governance acquisition - theoretically, we can issue bonds for governance tokens to increase our position in various deep liquidity providers & automatic market makers such as Tetu Finance, QiDAO, Curve Finance or the up and coming DystopiaSwap & Penrose Finance. By allowing new investors to gain more on their $SPHERE investment by providing a discount in exchange for these tokens, we can increase our shares of the deep liquidity, making Sphere Finance a big player in a multi-billion dollar endeavor in DeFi. All of that deep liquidity will be a massive source of income for the treasury, which will support our Perpetual APY.
  • It provides more and more liquidity for the LP - Since we have full freedom to issue bonds for any tokens we need for the protocol, we can issue bonds for WMATIC which we can use to provide even more liquidity for $SPHERE, making the price more and more stable long-term.
  • Bond-flipping is out of the question - Bond-flipping refers to the buying of bonds, only to sell the discounted tokens & repeat the process until it is no longer profitable. Thanks to our taxation system, for every bond-flip you would be losing a good percentage of your holdings, making our Kinetic bonds only viable for new investors and investors who wish to increase their position. This ensures that we have an influx of “new money” flowing into the treasury.
Cons:
  • It amasses tokens slower than conventional bonding - While there is no inflation on our bonds which we issue, we will have a limited supply of $SPHERE to issue in the Kinetic bonds because we earn $SPHERE through sell bonds. This makes earning tokens through this method slower than compared to conventional bonding.
  • It depends on a continuous cycle of whales buying Kinetic bonds to take their profits & new investors buying Kinetic bonds to increase their position - due to us not minting new tokens to support the bonds, we will always have a limited amount of $SPHERE that we can use to issue bonds.
A practical example of the Galaxy Marketplace:
Wilhelmina whale has 8M $SPHERE tokens and thanks to SPHERE can now buy her new home. However Wilhelmina has a problem, she is currently in the whale tax bracket and would pay 50% sales tax to cash out (20% base sale tax + 30% whale tax). Wilhelmina heads over to the new Galaxy Market and creates a Kinetic Bond. Instead of 50% sales taxes she gets a 10% discount. (Assume $SPHERE is trading at $0.20usd.) 8M x 0.20 = approximate $1.6M usd worth. (In reality if this was sold on Bogged it would be alot less because of slippage)
Without a Kinetic Bond at most she would get $800,000 because of the 50% sales tax. With a Kinetic Bond she would get $960,000. Wilhelmina is happy because she gets an additional $160,000 more than she has just swapped on Bogged.
The 8M $SPHERE tokens that Wilhelmina just sold to the treasury can now be used to further sell to investors who wish to help the protocol by offering tokens that they usually would not buy themselves, but do so to offer them to the treasury for a discount on $SPHERE tokens. Sniper Pete sees a new bond issued for $1.45M worth of WMATIC, offering $SPHERE at a 1% discount. Pete doesn’t wait & quickly takes the offer and buys the second-hand $SPHERE from the treasury, offering the protocol a brand-new batch of WMATIC it can use to farm with, provide liquidity to the Liquidity Pool, or hold it.