Bonding

What is Bonding

Bonding is the secondary value accrual strategy of SOHM. It allows SOHM to acquire its own liquidity and other reserve assets such as BNB by selling SOHM at a discount in exchange for these assets. The protocol quotes the bonder with terms such as the bond price, the amount of SOHM tokens entitled to the bonder, and the vesting term. The bonder can claim some of the rewards (SOHM tokens) as they vest, and at the end of the vesting term, the full amount will be claimable.

Bonding is an active, short-term strategy. The price discovery mechanism of the secondary bond market renders bond 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.

Bonding allows SOHM to accumulate its own liquidity. We call our own liquidity POL. More POL ensures there is always locked exit liquidity in our trading pools to facilitate market operations and protect token holders. Since SOHM becomes its own market, on top of additional certainty for SOHM investors, the protocol accrues more and more revenue from LP rewards bolstering our treasury.