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SaaS Bonding
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Hector SAAS Bonding is a mechanism that enables users to sell single asset tokens into the bonding market to a partner protocol, in exchange for discounted Bonded Tokens at a later date. This process helps to build Protocol Owned Liquidity (POL), which is vital for maintaining sufficient liquidity under all market conditions.
Bondings are sold at a discounted rate to incentivise users to deposit into the market. Each bonding has a lock period in order to prevent users from selling said tokens immediately.
The market is competitive, with users competing to find the most attractive discount. As the users win from discounted tokens, the platform earns fees based on transaction value.
Bonding provides several benefits to protocols.
- Protocol Owned Liquidity (POL). By owning liquidity, it enables the guarantee of sufficient liquidity under all market conditions.
- POL allows for additional yield farming opportunities. By owning this liquidity, we solve the issue of protocols needing suitable liquidity to fund rewards for operations activities
Issuer
The issuer is Hector, which will list the bonding round to the platform with the partner protocol.
User
The user is the individual who is incentivised to participate in the bonding market via discounts
Fixed-expiry bondings
- all purchases ‘unlock’ at a specific timestamp
- tokenized as ERC20
- 1.Inefficient capital: Almost all protocols own a percentage of their utility token. Usually, this is most prevalent within DAO’s, or Decentralised Autonomous Organisations. As of early 2022, there were 4000+ DAO’s, which includes protocols that want to deploy inefficient capital, and use this to their advantage, to exceed protocol success. Within SAAS Bonding, they achieve this via platform exposure, user retention, slow down of sales, POL, and further utility.
- 2.Sell pressure: Inflationary emissions causes short term price action, which will increase sell pressure if incentivised via farming rewards. This is seen via data suggesting that 42% of yield farmers exit within 24 hours. (Source: MasterChef from Nansen.ai) Through bonding, protocols can receive stables, or large non stables in return for their utility token, enabling them to incentivise rewards without their utility token, leading to immediate sell pressure.
- 3.LP’s in market crashes: In periods of time like market crashes, it is important for protocols to have POL, or stable assets in ownership to ensure liquidity depth is provided. This is done to reduce the risk of downward death spirals of the utility token in such an event.
- 4.Exposure: This includes marketing, platform exposure, utility token exposure to users, user retention. Hector has one of the largest names in DeFi, particularly in the bonding market.
- 5.Additional Features: Hector SAAS Bonding solves further problems. These include:
- LP bonding for protocols raising LPs for business functions
- Single asset bonding (general type)
- Ability to tap into Hectors emission plan under circumstances in order to provide a slower sell pressure and added utility
- Cross chain capabilities
- ZAP facilities to seamlessly generate LPs to fund a bonding action