Provide $SPHERE investors with a to-be S&P-style protocol to buy $SPHERE in exchange for governance skills. Dividends are paid by absorbing excess issuance from other governance tokens and reinvesting some of the excess back into the protocols, creating a positive feedback loop (compounding).
PoV of SPHERE developers: The crypto space sucks and locks up each other's liquidity. Trying to take over other protocols from the inside.
Sphere Finance, which aims to evolve into Polygon's S&P 500 fund, buys governance tokens from promising protocols and black holes these tokens in its treasury. The dividends accrued by these different protocols will be used to benefit $SPHERE holders.
Blackholing simply means that the tokens are held in Sphere's treasury and are not sold for momentary gains, but are held permanently by systems such as Vote Escrow (ve) to accrue more and more tokens of said protocols, and therefore more and more dividends for $SPHERE holders. It is to be believed that the larger Sphere Finance becomes, the more protocols will subsequently attempt to take control of Sphere and thus start a 'Sphere War'. In fact, once we become a Matryoshka doll big enough to take power over the doll that's taller than us, a smaller doll will come and try to do the same with Sphere.
To do this, we run examples.
Exhibit A: Mai.Finance offers a token called Qi. You can escrow this for eQi to get a share of the weekly fees collected from the protocol (based on your share). The highest boost you can get is by locking your tokens for 4 years. That's why we call it Black Holing, simply because we will crank the boost to the highest we can to receive the highest returns as possible for our users (continually locking for 4 years). Basically, we're doing this, so you don't have to, and you still earn the rewards like you would have, if you would have been locked in for 4 years! Therefore, Sphere creates liquidity for an otherwise illiquid market. On February 15th, eQi's LPY (Locked Period Yield) is 110%, which we will be using to maximize our users' earnings by giving back a large portion of the earnings to be put back into escrow or possibly other protocols' lock up, and the remaining portion of it goes back to our holders as a dividend.
Exhibit B: Sushi has a token called $SUSHI, you stake this into their SushiBar, where your $xSUSHI does not increase in quantity but $xSUSHI appreciates in price since each $xSUSHI starts to represent more and more $SUSHI. Therefore $xSUSHI > $SUSHI. Always. Basically, whenever you unstake, you receive the $SUSHI tokens you originally staked into the SushiBar and any additional ones you have received as dividend for staking during a set period of time. This is a method that gives less liquidity in return compared to other mechanisms but are also considered, depending on a votium (Sphere-to-be-DAO).