Question 1

What rights differ between holding bLUSD and holding a bond NFT?

Accepted Answer

bLUSD is a fungible ERC20 token that can be submitted for redemption for a corresponding share of the Reserve. A bond NFT is an ERC721: its holder controls the associated open bond and may choose Chicken In or Chicken Out. LUSD is the asset deposited to create a bond, so the three should not be conflated. The bLUSD redemption ratio depends on the reserve and supply; it is not a fixed one-LUSD-per-token exchange.

Question 2

Can more value be added after creating a bond, and must it wait until maturity?

Accepted Answer

Creating a bond requires at least 100 LUSD, and its bonded amount cannot be changed while the bond remains open. A bond has no maturity date. Its holder ends it by choosing Chicken In or Chicken Out, rather than waiting for a fixed term to expire.

Question 3

After Chicken In, can the original NFT still recover the bonded LUSD?

Accepted Answer

No. Chicken In turns the virtually accrued balance into claimable bLUSD, in exchange for giving the bonded LUSD to the protocol and relinquishing the original claim. The user retains an NFT whose state has changed, but it no longer represents a bond or a claim on any assets and cannot be used to recover that same LUSD.

Question 4

How does Chicken Out exit a bond, and why might LUSD not be returned immediately?

Accepted Answer

The holder of an open bond's NFT can Chicken Out to cancel the bond, forgo its virtually accrued bLUSD, and recover the bonded LUSD. After large liquidations, some exit transactions may temporarily revert if the resulting ETH has not yet been swapped back into sufficient LUSD. The statement that full exits resume after the swap completes assumes the liquidation at least breaks even. In an extreme liquidation loss, the Reserve and bLUSD holders bear losses first, and bonders can then be affected. Chicken Out therefore is not an immediate, unconditional principal guarantee.

Question 5

What is transferred with a bond NFT, and why is there a 24-hour restriction after closure?

Accepted Answer

Transferring an open bond's NFT transfers control of that bond to the recipient. After Chicken In or Chicken Out, the NFT no longer controls bonded assets, and the closed state is irreversible. NFT transfers are disallowed for 24 hours after either action, allowing the market to reflect its closed state and reducing the risk that a buyer mistakes it for the original asset right. This is an NFT transfer restriction, not a bond maturity period.

Question 6

What do Pending, Reserve, and Permanent each record?

Accepted Answer

They are internal accounting buckets: Pending records LUSD in open bonds; Reserve supports bLUSD; and Permanent records protocol-owned funds. Chicken In allocates the associated bonded amount from Pending to Reserve and Permanent. The three buckets are not necessarily three separate contracts holding funds. Yield from all three goes to Reserve, whereas ordinary bLUSD redemption only draws on Reserve and excludes Permanent principal.

Question 7

How is the bLUSD redemption proportion calculated, and what assets are received?

Accepted Answer

Submitting bLUSD equal to x% of total bLUSD supply redeems x% of the Reserve. The accounting redemption-price relationship is q_r/S, where q_r is Reserve LUSD accounting value and S is total bLUSD supply. This ratio does not guarantee a market-trading price and can be affected by reserve losses. The redemption can return LUSD and/or yTokens for the Yearn Curve LUSD vault. The mix depends on how funds are allocated between B.Protocol and the Yearn vault, so delivery entirely in LUSD is not guaranteed.

Question 8

Why can a longer-waiting bond have less virtually accrued bLUSD?

Accepted Answer

The accrual curve approaches a cap equal to the bonded amount divided by the redemption price. When yield harvesting raises the redemption price, that cap falls, so the virtually accrued balance can step down. For a bond kept open for a long time, new accrual becomes progressively slower. If the effect of a falling cap exceeds new accrual, the virtual bLUSD balance decreases. Waiting longer therefore does not guarantee more bLUSD to claim.

Question 9

How is underlying yield harvested, and must holders act themselves?

Accepted Answer

B.Protocol swaps ETH liquidation gains and LQTY rewards back into LUSD, with B.AMM buyers participating in that harvest. A Yearn-controlled keeper performs Yearn-vault harvest transactions. Chicken Bonds users do not need to perform those harvests themselves. Yield is accounted for in Reserve, rather than periodically paid directly as LUSD to every holder.

Question 10

Does non-upgradability of core logic mean external vault strategies cannot change?

Accepted Answer

No. Yearn has administrative control over the Curve Vault and can add or remove strategy contracts; those strategies determine how vault funds are deployed. A malicious strategy could report a false share price or cause bLUSD redemption to fail. Non-upgradable core logic does not remove dependence on external vault strategies and administrators.

Question 11

What does the controller change when it adjusts alpha?

Accepted Answer

The controller compares the amount-weighted average age of pending bonds with a target. When the average exceeds the target, it lowers the accrual parameter alpha to speed bLUSD accrual. This changes the accrual curve; it neither gives bonds a fixed maturity nor guarantees a fixed return.

Question 12

If the Yearn v2 vault is retired in the future, how would the wind-down handle funds?

Accepted Answer

This is a conditional migration design. If the Yearn v2 vault is retired in the future, Yearn governance may trigger wind-down once, moving Permanent funds to Reserve so they become redeemable. It also disables new bond creation and the system’s movement of LUSD between B.Protocol and the Yearn Curve vault, while waiving Chicken In fees. The design lets bonders exit and bLUSD holders redeem, then migrate funds themselves; it does not automatically move user assets into a new system. Its existence does not mean wind-down has been triggered or migration completed.

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