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Stag and Elk
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Bonding
What is bonding?
Bonding is the second way Stag adds value to the protocol
This is how Stag controls its own liquidity and other reserve assets, such as ELK, by selling STAG at a discount in exchange for these assets. The protocol gives the bonder terms of exchange such as the bond price, the amount of STAG tokens entitled to the bonder, and the vesting term for said bonds. The bonder can claim some of the rewards (STAG tokens) as they vest, and at the end of the vesting term, the full amount will be claimable.
Different discounts will be available on each bond depending on the POL requirements at the time.
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.
Stag also offers the option to bond and vest the whole bond immediately, a (4,4) strategy, where the bond is immediately vested in full and the purchased sSTAG is staked in the protocol to earn maximum return immediately. This sSTAG is locked for five days.
Bonding allows Stag to accumulate its own liquidity. We call our own liquidity Protocol Owned Liquidity (POL). More POL ensures there is always locked exit liquidity in our trading pools to facilitate market operations and protect token holders. Since Stag becomes its own market, on top of additional certainty for STAG users, the protocol accrues more and more revenue from LP rewards bolstering our treasury.
Last modified 6mo ago
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