First, we would like to offer our sincere apologies for the issues we are currently experiencing with the PDO Bonds (bPDO). This message is to update you on:
I. what has happened;
II. what we are doing to fix the issues at hand as well as to compensate those affected (incl. An ETA), and;
III. what we are doing to prevent similar issues in the future.
We also recognize that our communication has been suboptimal and left the Pollo Family in uncertainty. Hence, we are engaging an established marketing and communication agency to support us going forward.
I. What has happened?
Discount on bonds
We can distinguish between two basics mechanisms that provide an incentive to buy bPDO:
- Discount. bPDO is purchase data discount(e.g. the square of the current PDO price). Once PDO is above peg ($ 1.00), bPDO can be traded for PDO at a one-to-one (1:1) ratio.
- Premium. When PDO is above it’s peg ($ 1.00), bPDO can be traded for PDO at a premium (e.g. 30% above the current PDO price). When PDO is below its peg, the same
discount is applied on the acquisition price of bPDO. In line with the PBI documentation we do not use this mechanism.
In the Pollo Basic Income Doc (https://official.pollo.finance/basic-income/), I clearly stated that “there are no discounts and premiums in Bond”.
However, at the stage when I wrote the Medium article, I published the article under the assumption that there is a discount on Bond. This is due to a mistake by the Pollo team. We will enable the discount in the future.
It also turns out that Pollo Basic Income does not have a “PDO price squared” setting (It existed in the original Basis cash). Pollo’s discounts can be set up to 1.3 times. So the following is an example.
If you are trying to buy a bond for $0.9
Discount amount: 1 + (((1 / 0.9) — 1) * 0.3) = 1.03…
In other words, you will receive about 1.03 times the bPDO for the PDO you sent.
If you try to buy bond for $0.4
Discount amount: 1 + (((1 / 0.4) — 1) * 0.3) = 1.45
Since 1.45 is more than the maxRate of 1.3, you will receive 1.3 times the bPDO for the PDO you sent.
Pollo will set this discount.
Redemption of bonds
Purchased bPDO should be redeemable at the start of an epoch, provided that the Time Weighted Average Price (TWAP) is at least $ 1.01. We regret that many of you have reported that you were unable to redeem your bPDO.
We have not identified definite root cause yet. We suspect a lag in the contract execution to be the cause, due to a high server load. We will continue to monitor the situation.
In addition, There is a limit to the maximum bond redemption per epoch. The points are as follows.
- Additional Dollar for Bond redemption will be minted only when the epoch is updated and the PDO is $1 or more.
- Bond will not be minted if there is more than the Bond quantity of Dollar stocked in Treasury.
The specific amount that can be redeemed depends on the number of Bond and PDO minted.
https://pollo.finance/regulations
It is reasonable to look at the history on the regulations page.
II. What are we doing to fix this?
Discount on bonds
We will enable the discount mechanism on bPDO by April 29th.
Furthermore, we will compensate those who purchased bPDO after we published our article but before we alerted them to the mistake on Twitter (block #6849850~#6895627, see: https://bscscan.com/block/6849850, https://bscscan.com/block/6895627).
Specifically, the first Bond issue will not be included in the compensation. This is because the first issue was made prior to the confirmation of the article published by the Pollo team, and the users who purchased it would have accepted that there would be no discount.
The compensation rate will be capped at a ratio of PDO to bPDO of 1.3.
Please provide us with the transaction id (txid) for your bPDO purchase and Wallet Address by submitting the following form: https://forms.gle/186Vv9y7U18oiVxD7 . We will send the compensation to your wallet as soon as possible.
Redemption of bonds
We will continue to monitor the situation and take further actions when necessary.
III. How do we prevent similar issues in the future?
The current situation has increased our awareness that clear, effective and timely communication is crucial. Both between members of the Pollo Core Team and towards the Pollo Family. The Team has taken this as an opportunity to learn.
As stated before, we are engaging a well-known agency to amplify our communications and marketing efforts. We are excited to work with them and have already reached an agreement on the scope of their services and fees.
Lastly
We again apologize for the situation and for letting you down. As said, the Team is taking this as a learning opportunity. We have exciting things in store and will start sharing regular updates as part of our reinforced communication strategy.
This includes:
▪ The launch of Pollo Vaults;
▪ The CertiK Audit (nearing completion);
Stay tuned!
