Bonding

Bonding is another way that token holders can accrue rewards.

By swapping stable coins like USDC or Liquidity Provision (LP) token pairs directly with the United DAO Protocol in exchange for discounted UTD tokens, the protocol is able to build up a liquidity reserve of stablecoins.

The protocol quotes the bonder with terms such as the bond price, the amount of UTD tokens entitled to the bonder, and the vesting term.

In return, bonders receive discounted UTD tokens at regular intervals as they vest, and at the end of the vesting term, the full amount is claimable.

Bonds will be vested at a linear rate, which can be claimed at any point in time during the bonding period.

Bonding allows us to accumulate our own liquidity. We call our own liquidity Protocol-Owned-Liquidity (POL). More POL ensures there is always sufficient liquidity in our trading pools to facilitate market operations and protect token holders. Since United DAO becomes its very own market, on top of additional certainty for UTD investors, the protocol accrues more and more revenue from LP rewards bolstering our treasury.

What is Protocol-Owned-Liquidity (POL)?

POL refers to the amount of Liquidity Provisions (LP) that the treasury reserve owns and controls. The higher the POL, the more benefits there are to the protocol and its users. United DAO does not have to pay out high farming rewards to incentivize liquidity.

United DAO guarantees the market that liquidity is always there to facilitate buying and selling. By being the largest liquidity provider (LP), it earns the bulk of the LP fees, which represents another source of income to the treasury reserve. All POL can be used to back UTD. The LP tokens are marked down to their risk-free value for this purpose.