Bonds to burn LUNC

Proposals
1

I was wondering if it would be possible to develop a system like this, a sort of bond for LUNC with eventual burn.

Take 10 billion LUNC which corresponds to 10% of 100 billion and lock them in a pool…

People can lock their LUNC into a bond with the following features: If you block 100 million LUNC blocks the current market value is stored, after one year…

If the market price of LUNC has dropped, then you receive 110 million LUNC.

If the price of LUNC has gone up, then you receive LUNC for a total of your initial market price (when you locked LUNC) + 10 or 15% of your initial market price. The rest of the LUNC is burned.

Exchanges need to remove LUNCs locked in the bond system from the circulating supply.

Different periods with different percentages can be foreseen if necessary.

2

Interesting idea—I really like the creativity behind using bonds with a burn mechanism. But I’m not sure if the system as stated would be sustainable, since the “extra” tokens for payout would have to come from somewhere real.

Could it make sense instead to structure this around staking LUNC as collateral, then lending against that position? The proceeds of those loans could be used to purchase actual government notes or bonds (5, 10, or 30 years). When those mature, the return could be measured against the participant’s original contribution. That way, there’s a tangible external yield backing the “interest,” rather than just recycling tokens in a pool.

Do you think such a model—staking → loan → bond purchase → maturity payout—would give the system a more realistic economic foundation, while still allowing us to burn a portion of LUNC along the way?

Sketch of Mechanics

  1. Locking / Staking

    • Participants stake their LUNC into a smart contract.

    • These tokens act as collateral and are removed from circulating supply.

  2. Loan Issuance

    • The protocol uses the staked LUNC to back loans (either directly or through trusted intermediaries).

    • These loans generate fiat or stablecoin liquidity.

  3. Government Bond Purchase

    • The borrowed funds are used to purchase U.S. Treasury notes or bonds (5-, 10-, or 30-year maturities).

    • These provide predictable, legally backed yields over time.

  4. Accrual and Comparison

    • At maturity, bond returns are compared to the participant’s original staked value.

    • Depending on outcomes, participants receive payouts in LUNC (or fiat equivalent), plus a bonus based on the yield curve.

  5. Burn Mechanism

    • A portion of either the bond yield or surplus LUNC is burned at each cycle.

    • This ensures that the system contributes deflationary pressure regardless of payouts.

  6. Duration Flexibility

    • Participants can choose different maturities (5, 10, 30 years).

    • Longer terms produce higher bond yields, which in turn can support larger LUNC burns and stronger rewards.

Numerical Example

  • Suppose a participant stakes 100M LUNC when the market price is $0.0001 → equal to $10,000 in value.

  • The protocol lends against this stake and buys a 10-year U.S. Treasury bond with an annual yield of ~4%.

  • After 10 years, the bond pays back roughly $14,800 (principal + interest).

  • That return is compared to the original contribution value ($10,000). The participant might be entitled to:

    • Their equivalent in LUNC at future prices, plus a bonus payout aligned with bond yield.

    • Meanwhile, a portion of the ~$4,800 profit is earmarked for burning LUNC, ensuring supply reduction.

No matter the price of LUNC at maturity, the system has both real external yield and a burn event built into it.

This way, the system ties LUNC to real-world yield-generating assets, introduces long-term incentives, and ensures sustainability. The burn remains central, but it’s backed by genuine income rather than circular token redistribution.