### tl;dr
A simplification of the protocol that dispenses with liquidity bonds is proposed.

To keep things simple, the proposal is written as if DAI is the only collateral used. The extensions to FRAX should be obvious.

### Observation
This proposal is based on the following observation:

If the treasury only ever supplies OHM/DAI liquidity at a price greater than 1 DAI per OHM, then each OHM in treasury owned liquidity or that enters circulation from this liquidity is guaranteed to be backed by at least 1 DAI in the treasury owned liquidity.

### Proposal

1. Discontinue OHM/DAI liquidity bonds
2. While the price of OHM is greater than 1 DAI, take `x`% of bonded DAI and supply it in two-sided liquidity to the OHM/DAI AMM. The OHM required for the other side should be minted by the protocol. It is backed by the supplied DAI for all time.
3. The remaining `100-x`% of bonded DAI should be used used to back OHM distributed to stakers and the DAO.

### Analysis
1. Each OHM in circulation and the DAO remains fully backed by 1 DAI.
3. Dispensing with OHM/DAI liquidity bonds simplifies the protocol considerably
5. The knob `x` can be adjusted between 0% and 100% as needed to favor increasing liquidity or increasing the the amount of OHM available to distribute to stakers and the DAO