Bonzo $HBAR Pool / $wHBAR Contract + Native Staking Rewards (2.5%)

Request for Comment
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  • Title: Bonzo $HBAR Pool / $wHBAR Contract + Native Staking Rewards (2.5%)
  • Author(s): Bonzo Finance Labs
  • SaucerSwap Voting Interface: n/a
  • Related Discussions: n/a
  • Submission Date: October 26, 2025

Summary

Upon launch of Bonzo Finance, the primary open source contributing team (Bonzo Finance Labs) chose to utilize the SaucerSwap $wHBAR contract for wrapping $HBAR, prior to deposit, for the following reasons:

  1. Hedera DeFi ecosystem alignment / prevention of DeFi liquidity fragmentation
  2. Greater efficiency of $HBAR liquidations, via usage of the same underlying $wHBAR asset as pools found in Hedera’s primary DEX (SaucerSwap)
  3. Driver of trading volume on SaucerSwap via #2 above

Users of Bonzo Finance have deposited approximately $11.5M (USD-denominated) of HBAR into Bonzo’s HBAR market. Operationally, those deposits are wrapped to wHBAR (HTS: 0.0.1456986; wrapper: 0.0.1456985) and end up in SaucerSwap’s wHBAR contract; Bonzo’s pool then holds wHBAR.

Hedera recently funded the staking rewards account 0.0.800 with 250M HBAR, which sets the network reward rate target at 2.5% while the account remains sufficiently topped up under Hedera’s program parameters.

Today, SaucerSwap stakes the wHBAR contract’s HBAR and routes the resulting HBAR rewards into daily SAUCE buybacks that feed the xSAUCE Infinity Pool.

We’re proposing a “win-win” adjustment: Attribute the Bonzo-sourced share of $HBAR staking rewards (sans a small % “bonus” for SaucerSwap) and use that share to:

  1. Send the attributable rewards to a Bonzo protocol-owned account for Bonzo governance to direct,
  2. Buy back BONZO on the same cadence to fund xBONZO single-sided staking emissions, or
  3. Another approach suggested by the SaucerSwap and/or Bonzo Finance community + respective development teams

Abstract

What’s Happening Today
By design, SaucerSwap’s wHBAR wrapper proxy-stakes its HBAR balance to a Hedera validator node; HBAR rewards are swept daily and swapped to SAUCE for the Infinity Pool (single-sided staking), alongside other sources (swap-fee share and farm emissions).

Why It Matters Now
The 0.0.800 top-up of 250M HBAR re-energizes network-wide staking rewards at a target of 2.5% APY (subject to Hedera’s thresholds). This materially increases the value generated by HBAR sitting in the wHBAR contract—including the Bonzo-sourced portion.

What the Bonzo Finance Community is Asking
Implement a pro-rata attribution for Bonzo-sourced HBAR inside the wHBAR reward-flow (using SaucerSwap’s existing intermediary payment splitter → BrewSaucer → Infinity Pool architecture) so Bonzo’s share either routes to a Bonzo protocol address or buys BONZO for xBONZO emissions (same buyback cadence as xSAUCE). We’re open to leaving a small portion (e.g., low single-digits %) with SaucerSwap as an operations fee to keep this win-win.

Motivation

  • Bonzo users’ $11.5M of HBAR currently contributes to SaucerSwap’s buyback engine without a mechanism to return a Bonzo-aligned benefit to those users or the Bonzo protocol.
  • With the 2.5% network reward rate now live (per 0.0.800 funding), the opportunity cost of inaction rises—roughly $287.5k/yr on $11.5M if the rate persists (see “Outcome model” below).
  • Aligning a proportional share to BONZO/xBONZO or to Bonzo governance strengthens both ecosystems: SaucerSwap maintains its xSAUCE engine, while Bonzo channels its attributable yield to BONZO holders or protocol growth.

Motivation

Current flow (per SaucerSwap Docs)

  • wHBAR contract → (stakes HBAR) → HBAR rewards → intermediary payment splitter → BrewSaucer swaps to SAUCE → Infinity Pool (xSAUCE buybacks).

Proposed addition (no disruption to xSAUCE):

  1. Attribution basis. Establish Bonzo’s pro-rata share of wHBAR-sourced staking rewards based on time-weighted net HBAR inflows traceable to Bonzo’s HBAR market (Account: 0.0.7308509 as Bonzo’s pool; ref for context).
  2. Splitter update. Extend the intermediary payment splitter to direct a configurable percentage (Bonzo share) of the daily HBAR rewards to a Bonzo path:

    • Option 1: Send the attributable HBAR (or post-swap asset) to a Bonzo protocol-owned account for governance-directed use.

    • Option 2: HBAR → buy BONZO on SaucerSwap (same daily cadence), then deposit purchased BONZO to the account used to fund xBONZO emissions (i.e., increase the BONZO → xBONZO conversion rate over time, mirroring how SAUCE → xSAUCE grows).

  3. Tagging (if needed). If precise accounting inside the existing wrapper is non-trivial, Bonzo is open to a lightweight “Bonzo deposit gateway” that mints standard wHBAR but tags deposits for reward splitting—minimizing contract surface changes while preserving fungibility.
  4. Alternative (not preferred for now). A distinct Bonzo-wrapped HBAR (e.g., a separate wrapper or Hedera-provided one) that stakes and directs rewards to Bonzo policy. Mentioned for completeness; we’d prefer to keep using SaucerSwap’s wHBAR to avoid liquidity fragmentation.

Why this design: It reuses SaucerSwap’s documented reward plumbing, keeps the xSAUCE buyback loop intact, and simply adds a branch that aligns the Bonzo-sourced share with Bonzo’s tokenomics.

Benefits (Pros)

  • Alignment & fairness: Bonzo-sourced rewards benefit Bonzo participants while preserving SaucerSwap’s xSAUCE engine.
  • Ecosystem strength: Two healthy single-sided staking systems (xSAUCE and xBONZO) that compound via daily buybacks.
  • Low lift conceptually: SaucerSwap has already described the payment-splitter → BrewSaucer flow; extending the splitter is a contained change.
  • Governance clarity: Keeps funds on-chain with transparent, rules-based splitting, easing auditing and community trust.

Downsides (Cons)

  • Requires contract modifications and joint testing.
  • Attribution logic must be designed to avoid gaming and to handle flow churn.
  • No retroactive distributions proposed (forward-looking only).

Voting (when/if formalized)

  • Option 1 — Implement Bonzo pro-rata reward splitting to a Bonzo protocol-owned account.
    Same cadence; Bonzo governance decides usage.

  • Option 2 — Implement Bonzo pro-rata reward splitting to BONZO buybacks (xBONZO emissions). Adopt a daily HBAR → BONZO buyback (SaucerSwap venue) with automated deposit to the xBONZO emission account; optional ops fee to SaucerSwap (exact % to be discussed).

  • Option 3 — Alternative community design. (e.g., hybrid split between BONZO buybacks and Bonzo treasury, or time-boxed pilot.)

  • Option 4 — Status quo (no change).

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On principle, I don’t mind the pro rata split. I’m not a technical person, but I wonder how routing would be designed that checks the balances before dividing up the rewards.

As for what to do with those HBARs, the Bonzo community should discuss a lot on this.

1 Like
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Definitely in favor of SS providing some benefit to HBAR investors on Bonzo as it is a linked investment as the SS contract is being utilized. If there isn’t some sort of like compensation, this will cause a reduction in liquidity of Bonzo and since it’s a linked investment, in Saucerswap. I want to keep the capital on chain and in wallets and preferably on SS & Bonzo.

Would this change cause extra transaction fees when staking or unstaking?

Are we proposing a stable or variable APR/APY? If the supplied HBAR to 0.0.800 runs out in 1.5 years, just wondering if we would need another proposal to change things if this was to pass.

If this passes I would like to be able to verify my earned rewards independently. How transparent would the reward calculation and distribution be?

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As an $XSAUCE holder, what benefit does this have to me? I can only see this as a negative as a portion of the HBAR used to do the $SAUCE buybacks will instead now go to $Bonzo buybacks. We’ve already had 50% of our $SAUCE buybacks taken away, so I am not supportive of anymore being taken away from us.

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I echo Wojaks concerns. But do want to be good partners to Bonzo. I’m also an xbonzo holder so may come out in the wash. Will there be other projects who use the wrapped hbar contract and therefore want their piece of the pie? Maybe the saucerswap team can give us updated projections on the xsauce apy with the new consensus transaction cost and Bonzo getting their piece of the pie?

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Hey thanks for the reply here.

Would this change cause extra transaction fees when staking or unstaking?
No, this will not cause change to transaction fees for staking / unstaking.

Are we proposing a stable or variable APR/APY? If the supplied HBAR to 0.0.800 runs out in 1.5 years, just wondering if we would need another proposal to change things if this was to pass.
It doesn’t matter what the APY is for native Hedera staking — it could be 0.002% or 10% and the mechanics described here would be the same: $HBAR native staking rewards earned on $HBAR supplied by Bonzo Finance (to the $wHBAR contract) will be routed to Bonzo Finance or used to buy $BONZO tokens + deposited into Bonzo’s $xBONZO Single-Sided Staking treasury.

If this passes I would like to be able to verify my earned rewards independently. How transparent would the reward calculation and distribution be?
Yes this will be on-chain / transparent.

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Hey @Wojak — I think you need to go back and read the post in full to understand the issue.

Or check out this reply from an LLM to your question (and feel free to ask it more questions): ChatGPT - Shared Content

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We can either roll off of SaucerSwaps $wHBAR contract and onto our own — bifurcating liquidity in the ecosystem while, at the same time, reducing SaucerSwap’s buy backs by $287,500/yr — or we can figure out how to make the above work so that it’s equitable and incentives aligned for both protocols.

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Hey,

Like I said, I want to be a good partner to Bonzo.

To make an informed decision from that perspective, I think it would be helpful to provide the sauce holder a more holistic picture of the whbar contract, instead of a Bonzo centric perspective of this contract. Do other protocols contribute and and at what rough percentages? That way we could see if other projects may make similar requests. I’d prefer to avoid the scenario where we make a decision for Bonzo in a bubble and then a similar requests from another protocol comes in and says Bonzo did such and such and we want the same…thereby creating a larger impact to xsauce staking rewards that were not really anticipated in this Bonzo RFC.

2 Likes
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I understand, I guess I am just not supportive of it as an XSauce holder. Ther WHbar contract is Saucerswap owned - the owner is the beneficiary of the benefits. It’s also not accurate to say that “because of Bonzo, the Hbar is in the contract”. If Bonzo wasn’t there, what is to say that Hbar wouldnt be in the WHbar contract anyways? In fact, the Hbar was already in the WHbar contract before Bonzo launched - within Saucer LP pools. What we saw when Bonzo launced was simply a movement of those Hbars to Bonzo.

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Well said Smugg, agree 100%

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Hey these are great questions —

Do other protocols contribute and and at what rough percentages? That way we could see if other projects may make similar requests.

Other projects do not contribute to this, as they have historically ran their own wHBAR contracts, which bifurcated liquidity across the ecosystem (multiple wHBAR versions); the only other users of the $wHBAR contract are small developers who want to hold $wHBAR because they’re performing actions against protocols in the raw $wHBAR format which are held by the pools. E.g. A liquidation bot that liquidated $wHBAR from Bonzo Finance and then wants to swap it for $USDC on SaucerSwap.

I’d prefer to avoid the scenario where we make a decision for Bonzo in a bubble and then a similar requests from another protocol comes in and says Bonzo did such and such and we want the same…thereby creating a larger impact to xsauce staking rewards that were not really anticipated in this Bonzo RFC.

Totally understandable; however, it’s not taking funds away from SaucerSwap — it’s actually of benefit to SaucerSwap because all $HBAR that is in SaucerSwap’s $wHBAR contract is earning native $HBAR staking rewards for SaucerSwap today; and the ask here is that instead of Bonzo Finance migrating off of using SaucerSwap’s $wHBAR contract, resulting in a loss by SaucerSwap of the full ~$275k/year of rewards, the Bonzo protocol keeps using SaucerSwap’s $wHBAR contract, growing the amount of $HBAR in the contract, and being rightfully given ~90% - 95% of the rewards (while SaucerSwap keeps the additional 5%-10% for their protocol).

This model is essentially a services fee being paid to SaucerSwap for usage of the $wHBAR contract. The alternative is that Bonzo Finance migrates off of the $wHBAR contract, bifurcates $wHBAR liquidity in the ecosystem, and SaucerSwap loses out on the 5% - 10% of additional rewards they would have received via Bonzo protocol’s usage of it.

Today they’re earning a “bonus” of $275k in rewards per year because Bonzo uses the contract; we’re asking that ~90% of those rewards be rightfully sent to Bonzo, while SaucerSwap keeps 5% - 10% as a bonus; the alternative is Bonzo protocol migrating off the contract and SaucerSwap loses all $275k/yr of $HBAR native staking rewards.

Does that make sense?

1 Like
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I mean, why wouldn’t Bonzo just create a wrapped Hbar contract if indeed it is just that simple to do that, and that way not giving Saucerswap 5-10%? Actually I would prefer Bonzo do that if you feel that Bonzo “deserves” the rewards from Saucerswap’s WHbar contract because Bonzo has is using Saucer’s wrapped Hbar contract. That the same as some LP provider depositing Hbar into the Hbar-USDC pool, then later saying “Because our liquidity contains HBAR, and because SaucerSwap stakes HBAR through wHBAR somewhere in its system, we believe we’re responsible for part of the staking rewards. Therefore, we want a pro-rata share of your HBAR staking yield diverted to us.”

So for me, yes Bonzo can feel free to create their own WHbar contract if they feel hard done by because they are using Saucer’s Contract, and Bonzo can keep the rewards from the Hbar in their wrapped Hbar contract.

But the rewards from staked Hbar in Saucerswap’s WHbar contract remains the property of Saucerswap, period.

1 Like
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I hear what wojack is saying, and xsauce is my biggest bag, so this is a painful request. But the rewards at play are no longer trivial…so it seems like it will be worthwhile to for bonzo to make their on wrapped hbar contract to best benefit their platform. Therefore this request seems inevitable to me.

from an ecosystem perspective, and holding a bonzo bag too, having supply rewards for hbar on bonzo matching/exceeding native staking reward seems important to attract more liquidity to their platform, especially since hbars supply is not capped. Having hbar rewards under native staking seems like a constrictor on the flywheel effect that people talk about. I’m of the opinion that ecosystem success is the most important factor for us retailers; however we have allocated our bags.

Bonzo and saucerswap have been such great partners. Would the saucerswap team weigh in on this. Is there any more juice they can squeeze into the xsauce rewards to offset this?

I think more hbar liquidity on bonzo will be very beneficial to when hedera gets its due and the most palatable delivery of this inevitable outcome would be a combined bonzo/saucerswap proposal, but failing that 10% is better than 0%.

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We should give Bonzo its 95% share of native HBAR rewards from the hbar its locking in the SaucerSwap contract. The choice isn’t between 95% and 100% — it’s between SaucerSwap earning 5% of something or 100% of nothing when Bonzo moves to its own wrapper. Plus it’s a choice between the tribalism that topples protocols and ecosystems or the collaboration that makes them grow. Keeping Bonzo on our contract strengthens the whole Hedera DeFi space. Collaboration is the simplest, safest path: Bonzo grows, SaucerSwap grows, and users get a unified ecosystem instead of fragmentation. The proposed split is reasonable, transparent, fair, and reinforces long term alignment. Approving it isn’t a concession. I see this as a strategic investment in keeping our ecosystem cohesive and mutually accelerating. Infighting and tribalism will not help us. Yes, it takes up some dev time, but that’s a strategic investment with good ROI - more collaboration between SaucerSwap and Bonzo teams also means stronger Hedera defi ecosytem relationships, and network effects that could pay dividends in the long run. This is a good suggestion, let’s do it.