Money in or out of the Hoard ecosystem is on-chain. Everything else is off-chain.
On-chain bonding will occur first. Once the receiver gets their funds, they remain off-chain and your bond stays bonded until the funds are withdrawn from the Smaug Network. This can happen mainly in 2 ways:
The user who deposited funds into Smaug Network wants to unbond their HOARD.
The user who received Smaug Network funds wants to withdraw these funds and settle on-chain.
We are considering time-based settlement as well. The key is to keep fees low, and the longer funds stay off-chain, the lower the fees, since intra-network transactions are free.