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What is Covenant

Covenant is a token with a Uniswap v4 hook attached to its pool. A hook is code that runs inside the exchange itself, on every trade — so the rules cannot be avoided by routing around the interface.

Covenant uses that to do one thing: turn part of every exit into a position.

The two ways to get a bond​

By selling. 20% of your sale (net of tax) does not reach the market. It becomes a bond registered to you, earning 10% per day. You still receive the ETH for the rest.

By committing. You can open a bond without selling anything: commit between 20% and 100% of your balance and it starts at 15% per day — the 10% base plus a +5 point boost. Better terms, because nobody forced you.

Why two different rates​

A bond from a sell is a consolation on something you did not choose. A bond you open deliberately is a commitment. The boost prices that difference — and it makes the voluntary path strictly more attractive, which is the point.

The boost lasts exactly as long as the commitment does: the moment your wallet sells or transfers even one token out, every commit bond it holds loses the +5 points, permanently for those bonds. And commitment is rewarded at the exit too — it opens a lifetime retention-free selling allowance of 5x the committed principal, so a sale that fits inside it pays only the 3% tax, whichever route it takes. Both rules are spelled out in Opening a bond.

Positions can be folded together with merge, and rates blend in proportion to size — but only like with like: sell bonds merge with sell bonds, commit bonds with commit bonds. A small position only nudges the rate; it cannot buy you a cheap upgrade.

What it is not​

  • It is not a staking contract you can withdraw from. The principal of a bond is a basis for calculating rewards, not a balance you own. You never get those tokens back.
  • It is not a burn. Committed tokens are not destroyed — they join the reward pool and are paid back out to bond holders. Anyone can verify this on the explorer.
  • It is not funded by trading fees. The 3% tax goes to the creator, never to bonds.