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

[Wojak]

Chat GPT response below.

Summary:

Bonzo is asserting that their protocol “contributes” ~2.5% APY worth of staking rewards to SaucerSwap’s xSAUCE engine because their users deposited HBAR, which ultimately became wHBAR inside the SaucerSwap wrapper. They argue they should therefore receive a proportional share of these staking rewards.

This logic does not hold up for several reasons.

-–

1. Bonzo did not generate staking rewards — Hedera did.

HBAR staking rewards are a network-level primitive; they arise regardless of which protocol routes HBAR into the wHBAR wrapper.

Bonzo users are not performing a value-creating activity.

They are simply depositing HBAR, and those HBAR get wrapped.

The same action would occur if any other protocol — or even a single retail user — deposited HBAR.

Bonzo cannot claim they “produced” or “earned” the staking yield. They simply enabled deposits into a wrapper that already existed.

-–

2. If Bonzo’s logic were accepted, then every LP, user, and protocol could claim a slice of wHBAR rewards.

Using Bonzo’s reasoning:

Liquidity providers who provide wHBAR/HBAR would be entitled to staking rewards.

Any user who wraps HBAR could claim rewards.

Any dApp that touches wHBAR could claim rewards.

This quickly becomes absurd and unworkable.

Staking rewards belong to the wrapper’s governance (SaucerSwap), not to whoever last touched the asset.

Otherwise the network’s reward model collapses into infinite fragmentation and entitlement claims.

-–

3. The wHBAR wrapper was live long before Bonzo existed; the balance did not materially change at their launch.

One of Bonzo’s core arguments is:

> “Our ~$11.5M of user deposits materially increased staking rewards.”

This is factually incorrect.

Historical snapshot analysis (and anyone can verify using HashScan) shows:

The wHBAR collateral account had substantial HBAR backing long before Bonzo launched.

Bonzo’s deposits did not create a discrete jump, spike, or step-change in wrapper collateral.

Their users simply became part of the existing pool, like anyone else.

They are claiming credit for existing liquidity that the wrapper already held and already staked.

-–

4. Bonzo receives full benefits of the SaucerSwap ecosystem without costs — shifting staking rewards to Bonzo harms $SAUCE holders.

SaucerSwap:

Built the wrapper

Maintains it

Handles staking, routing, BrewSaucer operations, gas, maintenance, and risk management

Provides liquidity infrastructure for Hedera

Powers swap fees, routing efficiency, and the entire DEX ecosystem Bonzo depends on

Bonzo:

Uses the wrapper for free

Uses SaucerSwap’s liquidity for free

Uses SaucerSwap’s price discovery for free

Uses SaucerSwap’s token pairs and routing for free

And now proposes:

> “We want a proportional slice of the staking rewards, too.”

This dilutes the xSAUCE buyback engine — the single most important mechanism for $SAUCE holders — while Bonzo contributes zero operational cost.

This is effectively a request to subsidize a competing token ($BONZO) using $SAUCE holder rewards.

-–

5. Bonzo’s proposal creates moral hazard and sets a destructive precedent.

If this passes:

Every new protocol will demand a share of staking rewards for bringing users.

Composability becomes a liability instead of a strength.

SaucerSwap will need to compensate every protocol that routes assets through it.

This defeats the entire purpose of a neutral, shared DeFi base layer.

-–

Conclusion: The proposal is misaligned with SaucerSwap’s tokenomics, unfair to $SAUCE holders, and structurally unsound.

Bonzo is attempting to claim perpetual staking revenue from a wrapper they do not operate, maintain, or contribute to.

SaucerSwap — and $SAUCE/$xSAUCE holders — shoulder all operational burden and ecosystem costs.

The staking rewards belong to the wrapper governance → not to whichever protocol temporarily funnels user deposits into it.

Therefore, the correct vote is: “Reject / Vote Against.”

A neutral and non-hostile closing statement:

> “Bonzo is free to build its own wHBAR wrapper and staking system if it wants, but it should not extract staking yield from infrastructure built and maintained by SaucerSwap.”

[bonzobrady]

Hey @Wojak — if you’d like have a constructive conversation, I’m always up for that.

There’s a significant number of assumptions made that are verifiably incorrect, misrepresent the proposal, and are now likely contributing to confusion for other users who may be reading your replies.

If you’re on the path of using ChatGPT to understand the proposal, and asking it questions, here’s a link that has ingests the proposal and our replies to work from + continue the conversation for further questions: https://chatgpt.com/share/e/693907cb-fc18-8004-a483-29af81987766

The prompt used from the very beginning of the chat is visible at the link above; I’m also pasting it here for transparency; I’ve asked it to intentionally not side with my point of view or be biased in any way towards my position, and to only explain the proposal and answer your questions in a factual, objective way.

Please help me reply to this user's comments, so that they have the most accurate understanding of the proposal being made in this governance forum; to generate this reply with as much accuracy as possible, read the attached information; it includes the original proposal, along with their messages / replies, my messages / replies, and their latest reply, which includes a copy/pasted a ChatGPT conversation that they had.

Please be as unbiased as possible — do not arbitrarily side with my point of view or be biased in any way; please only provide objective fact about the proposal being made and information that could be helpful for us all to understand and helps to address questions at-hand.

Let me know if you have questions here and would like to have a constructive conversation.

Thanks

[Wojak]

I can’t access your link I get an error “Conversation inaccessible or not found. You may need to switch accounts or request access if this conversation exists.”

I am having a constructive conversation with you. Im posting my views and you are posting yours.

[Wojak]

I just opened your chat gpt link posted a while ago. And whilst I don’t agree with using ChatGPT to prove a point, I will respond to it with various points:

1. The claims that Bonzo users deposited $11.5m worth of Hbar into bonzo whilst may be true, does NOT entitle Bonzo to a portion of SAUCER’s wrapped Hbar rewards. Those Hbars were already in SAUCER’s wrapped Hbar rewards.
2. If Bonzo’s logic is accpeted, shouldn’t every user of wrapped Hbar then be entitled to hbar stake rewards thus removing Saucer’s incentive for operating the wrapper? Clearly Bonzo’s proposal is flawed from the get go. Bonbo simply enabled deposits into a wrapper that already existed, and those Hbars were already there before Bonzo went live.
3. The implentation of such a feature is arguably very honeours for Saucer to implement and will require a lot of resources and testing and capital and ongoign monitoring etc. Who pays for all that? Surely you are not suggesting Saucer pay for all that and provide those resources?
4. Bonzo should create their own wrapper if they feel like they deserve the benefits from a wrapper contract. This is the only way to cleanly obtain a “share” of wrapper benefits. As mentioned in 2, fragmenting benefits from Saucer’s wrapper will eliminate the inventive for Saucer to operate said wrapper. Bonzo has said that this is the route they will take if thats the way the community wants to go - so why not go that way? Why are you pushing so hard to take some of Saucer’s wrapper rewards? It seems its a lose lose for Saucer (given the Hbar was already in the wrapper) and a win win for Bonzo. Completely 1 sided to Bonzo. Bonzo’s only argument is that they are “supplying” the $11.5m usd Hbar in the wrapper, which is simply not true.

[bonzobrady]

@Wojak

The claims that Bonzo users deposited $11.5m worth of Hbar into bonzo whilst may be true, does NOT entitle Bonzo to a portion of SAUCER’s wrapped Hbar rewards. Those Hbars were already in SAUCER’s wrapped Hbar rewards.

They were not already in SaucerSwap’s wrapped HBAR contract; they were added by Bonzo Finance via users depositing into Bonzo Finance’s liquidity pool — if the Bonzo Finance protocol goes the route of creating its own wrapped HBAR contract (which is cited in the proposal as a clear alternative), $11.5M of HBAR will flow out of SaucerSwap’s wHBAR contract. This is the key point being missed.

If Bonzo’s logic is accpeted, shouldn’t every user of wrapped Hbar then be entitled to hbar stake rewards thus removing Saucer’s incentive for operating the wrapper? Clearly Bonzo’s proposal is flawed from the get go. Bonbo simply enabled deposits into a wrapper that already existed, and those Hbars were already there before Bonzo went live.

No, because no other single large entity (protocol) is contributing $11.5M worth of HBAR to the SaucerSwap HBAR contract.

This is positioned as a bespoke deal given to the overwhelming amount of HBAR that Bonzo Finance (via its users) have deposited into the contract in order to use Bonzo Finance.

And again, as stated in the proposal, the alternative is to create a wrapper for Bonzo Finance — that is a very acceptable option and you can hold that opinion.

However, doing so will result in $11.5M of $HBAR exiting the SaucerSwap WHBAR contract and bifurcate wHBAR liquidity in the ecosystem.

The implentation of such a feature is arguably very honeours for Saucer to implement and will require a lot of resources and testing and capital and ongoign monitoring etc. Who pays for all that? Surely you are not suggesting Saucer pay for all that and provide those resources?

This is part of the reason for this discussion — as cited in the proposal, we need to understand, from those who are qualified to answer, the technical requirements. I have spoken with the SaucerSwap team about this 1-1 — I’d prefer they respond and provide insight; without trying to put words in their mouths, it has been cited as manageable + worth the small cost, given the above considerations.

Bonzo should create their own wrapper if they feel like they deserve the benefits from a wrapper contract. This is the only way to cleanly obtain a “share” of wrapper benefits. As mentioned in 2, fragmenting benefits from Saucer’s wrapper will eliminate the inventive for Saucer to operate said wrapper. Bonzo has said that this is the route they will take if thats the way the community wants to go - so why not go that way? Why are you pushing so hard to take some of Saucer’s wrapper rewards? It seems its a lose lose for Saucer (given the Hbar was already in the wrapper) and a win win for Bonzo. Completely 1 sided to Bonzo. Bonzo’s only argument is that they are “supplying” the $11.5m usd Hbar in the wrapper, which is simply not true.

The issue is your lack of technical understanding with regard to how this system operates, combined with enough ego and ignorance to never stop and question for a second your own understanding.

While I am always up for helping educate, being kind, and actively listening to others to understand their perspective — I have no tolerance or patience for someone who loudly and ignorantly spews arguments that are based foundationally on misinformation.

This will be my last reply to you; I’m incredibly disappointed in the behavior.

I hope to see someone from the SaucerSwap Labs team step in to provide thoughts, opinions, and insight on the subject matter at hand.

Thank you

[Wojak]

We will have to agree to disagree. You keep ignoring the fact that the amount of hbar in the whbar wrapper contract did not change notably since Bonzo go live. Thats verifiable onchain. You also failed to clarify the points regarding the resources/costs to implement your proposal.

Perhaps its best for Bonzo to create their own hbar wrapper contract, after all that way Bonzo can benefit fully from the wrapper rewards. After all, thats what Bonzo is after, so I dont see an issue with going that route which is best for both parties.

As a large Bonzo holder I am also incredibly disappointed at your approach here Brady. Its been rather misleading in an attempt to benefit one party (Bonzo) at the expense of the other (Saucer).

[Larry]

Hey everyone,

First off, I want to thank Brady and the Bonzo team. Bonzo is an important part of the Hedera DeFi ecosystem, and we genuinely appreciate the work they’ve put in and the volume and attention they’ve helped bring on-chain.

I’ll lay out how we see the wHBAR contract and this RFC.

The wHBAR wrapper, staking, and reward plumbing were designed with a very simple purpose: HBAR in the SaucerSwap wHBAR contract is staked, and native staking rewards from that staked HBAR flow into the SAUCE/xSAUCE engine. That’s the economic assumption xSAUCE holders have been operating under since we launched this system. The contract is open source, permissionless to use, and documented, including how it should be called safely and how rewards flow. Anyone is, and always has been, free to use it on those terms.

Bonzo chose to use the SaucerSwap wHBAR contract instead of deploying their own. That gave them a battle-tested, audited wrapper, avoided fragmenting wHBAR liquidity at launch, and made development easier. We’re glad they made that choice, and Bonzo’s adoption has been good for wHBAR liquidity overall. But from our perspective, using shared infrastructure does not create an ongoing right to the underlying infra’s revenue stream. Staking rewards from the SaucerSwap wHBAR contract belong to SaucerSwap governance and xSAUCE holders. If another protocol wants full control over staking rewards on HBAR used in its system, the clean path is to run its own wrapper and staking setup.

So why not just split the rewards? A few reasons.

It changes xSAUCE economics mid-flight. xSAUCE holders bought into a model where the wrapper’s staking rewards feed the SAUCE buyback engine. Sending a negotiated share of those rewards to another protocol is a material change to that model. Even if we wanted to make this work, attribution is genuinely hard. Defining “which HBAR inside the wrapper belongs to who” in a way that’s fair, robust to churn, and not gameable over time isn’t a simple accounting exercise—it’s non-trivial engineering and ongoing overhead that doesn’t currently exist in the system. And the precedent doesn’t stop at Bonzo. If we agree that one external protocol is entitled to a split because it builds on top of the wrapper, it becomes very hard to argue that future protocols (or even specific user groups) shouldn’t get the same treatment.

For these reasons, we don’t see “split the rewards” as a small, win-win tweak. It’s a structural change to how our base infrastructure is governed.

Bonzo has said that if this change isn’t made, they will likely deploy their own wHBAR, capture the native staking rewards themselves, and accept the liquidity split that comes with that. We fully respect Bonzo’s right to do that. If Bonzo wants to run its own wrapped-HBAR system and keep 100% of the associated staking rewards, that is perfectly reasonable. Saucer’s wrapper feeds Saucer’s rewards, Bonzo’s wrapper feeds Bonzo’s rewards. Clean and simple.

Where it becomes difficult for us is the framing that the rewards currently flowing through the SaucerSwap wHBAR contract are something Bonzo is “rightfully owed” because they are using the contract. We don’t agree with that framing, and we don’t think governance should be deciding infra-level economics under an if/else condition set by another protocol.

So, to put it plainly: we are not in favor of changing the SaucerSwap wHBAR reward flow to send a pro-rata share to Bonzo or any other external protocol. Bonzo is welcome to continue using the SaucerSwap wHBAR contract as it exists today, on the same documented terms it has always had. They’re also free to deploy their own wrapped-HBAR contract if capturing those staking rewards directly is a priority. If they choose that route, we’re happy to coordinate on integration and routing so users have a clear and safe UX.

We want to remain good partners with Bonzo and continue to grow the ecosystem together. At the same time, we have a responsibility to keep the economics of our core infrastructure predictable for xSAUCE holders and to avoid precedents that make every piece of infra revenue subject to renegotiation once a protocol reaches scale.

Happy to keep the discussion going and explore other ways SaucerSwap and Bonzo can collaborate that don’t involve changing the wHBAR staking reward flow.

– Peter

[SmuggMuggler]

What are the drawbacks for fragmented whbar liquidity from a saucerswap perspective?

I’m glad saucerswap weighed in…proposals like this that impact core assumption/ infrastructures should probably start with messaging from each team for transparency.

It will be disappointing to see xsauce apr take a hit, but it sounds like a clean break is the cleanest solution and doesn’t create precedent for future carve outs.