Bond Issuance Models: Waffle Model vs Bird Model

Greetings community,

Two models for acquiring assets with bonds are currently being discussed - both with different implications for depth of liquidity, price impact, and long term objectives. The two models are the Waffle Model (inspired by community member Waffle, OlympusDAO LP model) and the Bird Model (Single Asset Acquisition).

Waffle Model:

  • User buys Asset A
  • User buys SHD
  • User creates LP token: (Asset A / SHD)
  • User deposits into bond an LP token: (Asset A / SHD), treasury now owns the LP
  • Vesting period incurred
  • User claims SHD at discounted rate from bond
  • User sells SHD to realize discount profit (may hold or stake as well)

Pros: buy pressure is created in order to acquire the bond opportunity, this buy pressure offsets potential sell pressure from the bond issuance. Pulls an active market participant’s SHD out of the market
Cons: more complex user experience

Bird Model:

  • User buys Asset A
  • User deposits into bond Asset A, treasury now owns Asset A
  • Treasury uses its SHD to mint LP token: (Asset A / SHD)
  • Vesting period incurred
  • User claims SHD at discounted rate from bond
  • User sells SHD to realize discount profit (may hold or stake as well)

Pros: depth of liquidity is created quicker by leveraging pre-existing SHD on the treasury. Simple user experience.
Cons: no counter-active buy pressure, increases circulating supply through treasury using SHD in the LP pool.

Waffle Model
SHD = $1
SCRT = $1

  • $45 of SCRT purchased
  • $45 of SHD purchased
  • SCRT/SHD LP token minted ($90 worth, holding 45/45)
  • 100 SHD being sold at 10% discount for $90 of SCRT/SHD LP
  • 45/45 LP token received by treasury


  • -45 SHD pulled out of market (owned by treasury)
  • +100 SHD put into the market (owned by bond purchaser)
  • +45 SCRT gained (owned by treasury)


  • +55 SHD put into the market (+100 - 45)
  • 45 SCRT gained
  • 45 SHD worth of buy pressure on DEXs

Bird Model
SHD = $1
SCRT = $1

  • 90 SCRT purchased by market participant
  • 100 SHD being sold at 10% discount for $90 worth of SCRT
  • 90 SCRT received by treasury
  • Mint SCRT/SHD LP using 90 SCRT, & 90 SHD from treasury (90/90)


  • +100 SHD put into the market (owned by bond purchaser)
  • +90 SCRT gained (owned by treasury)


*+100 SHD put into the market

  • 90 SCRT gained
  • +90 SHD on the SCRT/SHD LP pair (additional SHD potentially in circulating supply)

Another consideration in this situation (credit to @AustinWoetzel) is slippage. Because DEXs are extremely illiquid right now, it may impact both of these models.

We would love to hear feedback on both models, and what is preferred in our situation and why? Additionally, what are your thoughts on how slippage fits into the equation?

-Carter Woetzel


If they are both viable options, choose the simplest! BIRD FOR ME :smiley:


Very interesting topic. I’m going to preface this with a statement that both are viable, and will support either method chosen. It was was just me, is probly day waffle, because I like the upward pressure aspect and im well verse in defi strategies. And I’m sure the majority of us here can agree that waffle method is something we can all handle fine. That’s standard defi.
However I come down in the side Bird option for one main reason, the extra steps involved in defi is a friction point to most people. Most of us have knowledge in how to navigate defi and web3 that 98% of the world does not have. And I would love to see new comers to the space taking part in this.
When I think of silk and its use case, I think of normal people using it to transact in daily things. Not just degens like myself hahaha.

All that to say, i will gladly take part in waffle option and help as many to on board as possible if we choose it.

But overall i vote bird.


Ooooorrrr can we set the interface to where, it feels like bird option, but executes waffle?

User deposits a single asset. $100 scrt

50% is then swapped to shd on market.

Converted to shd/scrt lp in the contract.

Deposited to treasury.

( this would be Extra work on the team tho)


Isn’t a better comparison made by having the market participant buy and supply 45 SCRT in the waffle example instead of 90 SCRT? Otherwise you end up with LPs of differing depths. Making the scenarios more comparable will reveal that the scenarios are much more similar than portrayed.

I would personally choose the Bird option to minimize inflation of SHD. If we assume that all the discounted SHD is sold then the upward pressure of the Waffle option is just wash trading. So whats the difference?

  1. Waffle option may increase transaction fees on the Shade LP Pool

If we accept the upward pressure will happen more in this scenario then more people will trade = more transaction fees. This is a one time fee of 0.30% * 50% * Amt of Bond Bought to LPers. Which i guess could be the DAO, but the DAO is also buying its own asset back at a premium of multiole %s. So id say net is a losing deal.

  1. Waffle option increases the amount of Shade in existence at a faster rate for same liquidity.

In one scenario we get $90 of SCRT and give out $100 of Shade. In the other we get $45 of Scrt/$45 of Shade and give out $100 SHD. To get the same depth of liquidity we would need to create double the amount of new SHD.

Conclusion: Maybe if we didnt have a treasury of SHD this would make more sense but i feel like is not needed right now. Even in that scenario id like to see the treasury buy back Shade on the open market to LP id think. Paying a premium for your own asset doesnt make much sense to me. I give you $5 and you give me $5.50 in a few days should only exist if the person has a productive user for those $5 that will outearn that 50cent interest.


In the first senario you mention, you’re missing the SHD that has to be “created” from treasury to supply the other side of the LP. I.e. we get $90 of SCRT, and create $190 of SHD from treasury ($90 for LP, $100 for bond). To achieve the same depth of liquidity via the waffle method, I agree with you that Treasury would need to introduce $200 of SHD as bond. So they’re quite close if the bond premium is small.

Both options seem like they would work. As someone who isn’t highly knowledgeable on finance and economics, the Waffle Model sounds nice. I like how it seems there would be some buy pressure and inflation would be slower. If I understand that correctly?

I can also definitely see how the Bird model would produce an easier user experience though. I don’t find the Waffle method too complicated, but I also learned on Osmosis where new users might not have that experience. I will also say that the more I used Osmosis, the more I actually started adding to the LP pools by only depositing one asset. I think when I’m storing coins sometimes it is just easier to have them consolidated.

Look forward to learning more from the others here.

I’m in favor of the Waffle model as I like the buying pressure feature and having the treasury directly own the LP. I’m not too concerned about this model having a slower growth of liquidity if we have a long term vision.

Imo, it will also attract less mercenary capital as they need to have skin in the game by buying SHD.
Another reason I’m in favor of this model is, by allowing users who has accumulated SHD or had their airdrop parked doing nothing to finally put their token to use (even if it’s only during the vesting period).
It could create positive loop for SCRT/SHD for user just taking the profit at the end of the vesting period and reproviding LP.
That could limit users dumping their 10% claimed airdrop if on the same airdrop claim landpage you had the bond interface. Would have been maybe nice to have an incentive like 2-5% more if you used your airdrop to bond directly (just an idea).

Regarding the UX friction, I think that’s the right opportunity to educate people how to LP with a detailed guide or even create a “zap” function: you come with one side of the LP, let’s say SCRT and the contract is swapping and LPing for you → no more UX friction.


I like the idea of @AnewbiZ. Very smart!
I think the bird model would work only if SHD had some real use cases. But, at the moment, this is not the case.
I expect a strong sell pressure if we use this model, which is not what we want.
Therefore, I vote for the waffle model.

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I agree with this. If we go waffle, i think it is a perfect opportunity to educate and set expectations.

The zap would take care of much of the friction as well. And if we can directly connect a good educational content to go over the details of LP and what is happening when the funds are bonded into LP. (Think of the airdrop video on shades website) I think this would go a long way to clear obstacles up confusion of new comers.

In the end, the majority of people investing in immediate future is going to be a bit of a veteran, and somewhat degen. Those already orange pilled. At least for the next few months. But thinking of how to minimize friction is still paramount for the few that do coming in as new comers, those we onboard ourselves, and those who come later when upcycles start. (If this works out. We are setting foundations for a long term platform, not a one time event)

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Great idea about the airdrop and liquidity providing. Crescent did something similar, made it a task to claim part of the drop. It helped people learn the system and get excited for the product. Overall I think they had an airdrop that many really liked.

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I agree if the premium is small then it’s not a big deal. That premium for your own asset is the main part I’m not a big fan of if we an avoid it.The other method is more efficient as long as we have the SHD already.

I agree with you, Bird makes more sense.

I agree with you the waffle is an opportunity to educate, but the LP process is not directly related to the idea of bonds, and I don’t think they should be conflated in one process. As you said yourself, many users in the immediate future are probably going to be a bit of a veteran - they don’t need the education.

Also I think both @Ranger_Ranger and I disagree with the idea that waffle introduces real “upward pressure.” The examples Carter gave are not properly comparable - I claim the end results are nearly identical if the bond premium is small.

From a consumer perspective, I think Bird is better. A bond where you get SHD is, at least for me, more lucrative than a bond where you just get more sSCRT. I vote Bird because I want SHD for my bond, not sSCRT. If I want sSCRT, I’ll just stake my SCRT and then convert what I want to sSCRT.

The Waffle model doesn’t give you sSCRT for your bond sir.

One model has you deposit both SHD and sSCRT, the other deposits sSCRT only. Both give SHD in return.

I would say bird model.

It is not directly related. But the idea is to deposit LP tokens into the bond model via waffle. Therefore an understanding of such is needed for non veterans of DeFi.
The trick is to make such an education succinct and structured to tell the difference of LP, and Bonds, as well as how it all works in the shade treasury.

That premium on your own asset is the price of not touching the DAO’s treasury to create the LP token :wave:

New discounted SHD need to be minted to the bond providers once they deposit the LP token.

Treasury would remain untouched, protocol would own its liquidity, which would be way deeper while dumps would have less price impact.

Still convinced about the Waffle model, which is not mine btw :sweat_smile:

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