it's a powder coating... some sort of epoxy.
the coating on mine started to crack and peel, but i was offered the option to return it to sog and have them shot peen the blade, or to polish it, but i declined, as i'm in Australia, and our customs are lunatics when it comes to knives.
anyway, i would not hesitate to buy the knife because of this, the customer service i recieved was second to none, and it is otherwise a fantastic knife that i've been using for everything from chopping up meat and vegetables in the kitchen to skinning kangaroos and other field duties.
i would reccomend the knife whole-heartedly.
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Conn
When your life flashe before your eyes...
makes sure there's somrthing interesting to watch.