A fidelity bond is a mechanism which ensures that market actors act honestly. It is a protection mechanism against various kinds of attacks that involve the creation of fraudulent identities.
It is impossible to move or spend funds that are locked in a fidelity bond before the bond expires. They cannot be used in collaborative transactions (neither as taker nor as maker) as fidelity bonds are time-locked by the Bitcoin protocol.
You can create a fidelity bond via the Earn screen. It involves the following steps:
- Set expiration date (which defines the bond's duration)
- Select a jar as funding source
- Select a UTXO, preferably one labeled
After that, you will be asked to review the bond configuration. If everything looks right, you can create the fidelity bond which will time-lock your funds for the set duration.
Refer to the screenshots below to understand the steps in more detail: