💸Bonding
Last updated
Last updated
When users mint $SB tokens, they are actually selling their assets in order to buy a bond from the protocol. Bonding Actions are a cross between a fixed income product, a futures contract, and an option. The protocol quotes the minter with terms for a trade at a future date. These terms include a predefined amount of $SB the bonder will mint and the time when vesting is complete. The bond becomes redeemable as it vests. I.e. in a 5-day term, after 2 days into the term 40% of the rewards can be claimed.
The price discovery mechanism of the secondary bond market renders mint discounts more or less unpredictable. Therefore bonding is considered a more active investment strategy that has to be monitored constantly in order to be more profitable as compared to staking.
We call our own liquidity POL (Protocol Owned Liquidity). More POL ensures there is always locked exit liquidity in our trading pools to facilitate market operations and protect token holders. Since Solbank becomes its own market, on top of additional certainty for $SB investors, the protocol accrues more and more revenue from LP rewards bolstering our treasury.
