- Why bonding over liquidity mining?
Bonding is beneficial both to $BOTTO holders and the protocol for long-term sustainability in emission distribution. When taking part in standard liquidity mining for a given APR, you are subject to the risk of impermanent loss due to price volatility of either $ETH or $BOTTO. Bonding passes on impermanent loss risk to the protocol, and the reward is vested over 7 days. With Olympus Pro, you can bond multiple times throughout the year, compounding interest and easily beating the APR of liquidity mining without the risk of impermanent loss. The protocol benefits because it now owns its liquidity, reducing the risk of liquidity getting removed from the market by mercenary capital, and has a much greater ability to absorb the impermanent loss risk.
- When is it best to bond?
Depending on market conditions, Bonding will provide a discount or premium to the market value of $BOTTO tokens. A discount means you are receiving $BOTTO at a better rate than what you could on an exchange. A premium means you are receiving $BOTTO at a worse rate than what you could on an exchange. The best time to bond liquidity for $BOTTO is when there are discounts present (not counting transaction fees and price volatility). Pricing of Bonds is not static and adjusts based on bonds available as well as the market price of $BOTTO.
- I’ve already staked my LP, can I still bond?
Yes, you will need to unstake your BOTTO-ETH LP shares from the app.botto.com in order to bond them. This transaction will cost a gas fee (you will still need to claim your accumulated rewards separately).
- Why is it important?
Bonding allows Botto to accumulate its own liquidity (POL). More POL ensures there is permanent, deep liquidity in Botto’s trading pools to facilitate market operations and protect token holders from unnecessary slippage and volatility.
- What's the catch?
There isn’t one. When $BOTTO tokens are purchased through a bond, they are not released all at once. By vesting linearly over a set period of time, the bonders are unable to sell their new $BOTTO immediately for a quick profit, buffering against dumps on discounts.