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Every proposal pulls a WOOD bond from the proposer into ProposerBondEscrow at propose time. This page explains why, how the size is set, and how much WOOD to keep on hand.

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Why it exists

The bond is the proposer’s skin in the game against a rug. If a proposal turns out to be a drain, anyone can file a challenge against it during the challenge window. A conviction forfeits the whole bond: up to 20% goes to the challenger and the rest is burned. There is no partial forfeit and no other way to lose it. The ledger’s own design note sums it up: honest proposers should not be priced out, and a rug should forfeit something meaningful.

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How big it is

  • proposerBondBps is 100 (1%) on 4663 (ExposureLedger.proposerBondBps()).
  • requiredCoverage is the USD amount guardians must underwrite before execute. See Tiers and coverage. For a proposal built by sherwood strategy propose, it is about 1× --amount: the CLI puts the whole amount on the strategy’s execute call and gives settle calls a cap of 0.
  • servedWoodPrice is half the market price (next section).
So the bond is 1% of the deployed amount, priced at half the WOOD price. At market, that is about 2% of --amount in WOOD. Worked example, using the 2026-10-15 feed price: a 60 USDG basket had a required coverage of 60 USDG and a quoted bond of 371 WOOD (proposerBondWood(USDG, 60e6)). At the feed price of about 0.0032perWOOD,thatisabout0.0032 per WOOD, that is about 1.20, or 2% of 60. Never plan from a fixed WOOD figure. The CLI quotes the live bond at strategy propose, and the WOOD count changes with the WOOD price.

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Why the bond is quoted at half price

The ledger serves WOOD at 0.5 × min(feed, cap):
  • The 50% haircut (woodHaircutBps = 5000, also the floor the parameter cannot go below). Collateral wants a floor, not a quote. Valuing a bond at half of market means a sharp WOOD drop still leaves a meaningful forfeit behind every proposal. Valuing bonds below half of market would be a mis-set parameter, so 5000 is also the minimum.
  • The cap. woodUsdPriceX8 is a ceiling set at deploy at 2× the spot price of the time. A pumped WOOD price cannot shrink bonds below what that ceiling allows.
  • The feed. A 1-hour Uniswap V3 TWAP times Chainlink ETH/USD (WOOD_USD_TWAP_FEED, max age 1 hour). If WOOD cannot be priced, propose reverts NoWoodPrice. That halt is deliberate: halting proposal creation costs nothing that cannot wait, while admitting an unbonded proposal does.
The practical effect is that a WOOD price fall raises the WOOD count of every new bond.

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When it comes back

The bond outlives settle because a proposer who drains a vault and self-settles would otherwise walk away with it. See Challenge window. sherwood proposal reclaim-bond --vault <vault> --id <id> is permissionless and always pays the recorded proposer. Before the window closes it reverts ChallengeWindowOpen.

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How much WOOD to hold

  • The owner stake: 10,000 WOOD, once per vault.
  • One bond: about 2% of the capital you plan to deploy in that proposal.
  • Headroom: a WOOD price fall increases the bond, so hold about 3–4% of planned capital for one proposal.
  • Overlapping bonds: each settled bond stays locked for duration + 14 days. With back-to-back proposals you hold about (duration + 14 days) / cadence bonds at once. Seven-day proposals run weekly keep about three bonds in flight.
The CLI approves the quote plus a 5% buffer to the escrow, never an unlimited amount. If the quote is 0 (WOOD unpriced), it emits no approve, and the propose then reverts in the escrow pull. WOOD trades in shallow pools. Quote before you buy, buy in tranches, and get the live bond from a keyless strategy propose dry run first.