Abnormal Bonds
There may be investment cycles where the amount of calculated QBs issued may exceed that of the weekly tax treasury value and are thus capped to the maximum value of the current week's tax revenues. This scenario presents itself when the previous week's trading volume vastly outweighs the current to an extreme, leading to a moving average greater than the current week's tax revenues (continuing with the example from Issuance and return scenarios from Normal Bond Periods);
Week 4: $20,000 of taxes accrued
$7,500 of "W-004" QBs issued, maturing after sale of "W-004" assets
Week 5: $100,000 of taxes accrued
$30,000 of "W-005" QBs issued, maturing after sale of "W-005" assets
Spillover bonds may be issued to ensure liquidity and stabilize the protocol.
Week 6: $10,000 of taxes accrued
$27,500 of "W-006" QBs issued, maturing after sale of "W-006" assets$10,000 of "W-006" QBs issued, maturing after sale of "W-006" assets
Note, this bond period is abnormal and inflationary risk is heightened
Week 7: $30,000 of taxes accrued
$10,000 of "W-007" QBs issued, maturing after sale of "W-007" assets
During "Week 6" the value of bonds issued is forced to equal that of the tax treasury. While the potential for inflation is heightened under these cases, higher risk bonds can help to increase or redistribute the supply of $QD.
The example below shows potential divestment results for "Week 6", where abnormal bonds issued are capped equal the tax revenues of $10,000. Repeating the return cases found in Normal Periods of +3.5%, +8%, +1%, and -20%, respectively.
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