Owning Our Liquidity via Our Innovative Soul Bonds — #PODL

The Double-Edged Sword of Liquidity Mining

However, this liquidity mining model of renting out liquidity may, in fact, be a double-edged sword.

Demonstrating the long-term implications of liquidity mining operations.

We Are Innovating Alongside DeFi 2.0

We require users to pay for what they walk away with.

Total Liquidity over Time | Renting (inconsistent, volatile) vs. Owning (net positive)
Liquidity Mining (1.0 Renting Liquidity) vs. Bonding (2.0 Owning Liquidity)

Owning Liquidity for Long-Term Sustainability

How Our Bonds Innovate

Given the popularity and quick adoption by users I came to wonder whether perhaps the best use case for a bonding mechanism exists in the case of a DEX.

How Soul Bonding Works

|    PAIR    |  AP  |  Daily  |
| ----—----- | ---- | ------- |
| SOUL-FTM | 1K | 25.86K |
| SOUL-USDC | 600 | 15.52K |
| SEANCE-FTM | 600 | 15.52K |
| FTM-USDC | 600 | 15.52K |
| FTM-DAI | 600 | 15.52K |
| FTM-BNB | 600 | 15.52K |
| FTM-ETH | 600 | 15.52K |
| FTM-BTC | 600 | 15.52K |
| USDC-DAI | 600 | 15.52K |
  • In order to participate, users must deposit their LP and they are able to “Mint Soul” once they find it opportune to do so.
  • When you “Mint Soul”, you turnover (exchange) your LP to the DAO Treasury in exchange for the Soul you are eligible to mint.
  • Minting sooner than at least your invested LP means you are effectively donating liquidity, which you’re allowed to do, though this certainly works against you if you plan to profit from this structure, so we do not advise doing so. Please ask if you are unsure about the minting process.
  • In other words, we expect users to mint SOUL only after they have recouped at least the deposited amount, which you can identify on the interface (see pictured).
  • Of course, most will likely decide to stay a bit longer to accrue additional gains on top of the deposited LP.
  • Since gains are only realized after one bonds, this incentivizes users to hold onto their pending SOUL for longer than ordinary farms, which means less frequent and haphazard withdrawals.
  • The pending “Mint Soul” amount increases over time in a manner akin to traditional farms, so you may expect a higher APR with a smaller pool size and a smaller APR in a larger pool size.
Example of a Bond worth $464.93 with a pending Mint Soul value of $83.15 after ~3 days of bonding.

How Protocol-Owned DEX Liquidity Benefits Soul Protocol

  1. Bonding means more liquidity held by the DAO, which means less need for providing SOUL incentives in the future.
  2. Our ultimate goal is self-sustainability and a removal from a rental model (paying to rent liquidity) and this is a step in that direction.
  3. Fee-removal will incentivize more participation in the liquidity mining (farms) as we will no longer deter fee-antagonists.

TLDR; Key Considerations

  • When depositing, you are surrendering your deposit to the DAO Treasury upon minting SOUL.
  • You are contributing to the ecosystem and are rewarded with variable gains paid out in SOUL.
  • You may only claim once — it is all or nothing.
  • You must claim before creating a new bond.
Checkout our new reserve asset LUX, which inspired our SOUL Bonds.

Side Note on Withdrawal Fee: 0% Withdraws from Farms

OUR DISCLAIMER ON BONDS

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