The Sponsor locks up a certain amount of liquidity for a certain number of blocks, like for example 10'000, which is roughly 3 months. For locking up his liquidity and allowing people to use it on the sidechain he is rewarded with interest, for example 1%. The Sponsor is also the primary market maker, his function is to provide a stable peg, thus make the sidechain desireable for people to use. The Sponsor has no way to claw back the coins he locked up, they are predetermined to go to the mainchain miners can only regain custody of his 10% escrow if the covenant chain is played out block by block all the way to the end.
duration: 10'000 blocks
bitcoin locked up: 100%