ETH: Internet Bonds
source|bankless.substack.com
source|
Author | Collin Myers & Mara Schmiedt
Before the advent of public blockchain networks, it was not easy for entities or individuals to directly participate or gain financial exposure to the Internet's grassroots.
The arrival of Web 3.0 has changed this. Now, through Internet Bonds, a new generation of digital work protocols, it is possible for participants around the world to gain exposure to the open source web economy.
Understanding the fundamental properties of this new type of protocol is a critical step in order to build better models, make more accurate assessments, and create better products around them. In a mature state, the benefits of this new Internet protocol layer are equivalent to the risk-free rate of the decentralized financial ecosystem and become the benchmark for evaluating the cost of trustless value transfer.
As Internet bonds grow in popularity, creating a common term and understanding them will help in their global application.Internet Bond White Paper》
first level title
What are Internet Bonds?
Today, the most popular digital work agreements involve staking value for the rights to provide the work and earn a benefit. This is known as "staking".
(Annotation: In Eth2 Staking, it refers to mortgage 32 ETH to become a validator, obtain the right to propose blocks and prove blocks, and earn profits.)
Similar to traditional bond structures, staking comes in many forms, but at its core it is an agreement between the bond issuer (protocol) and bondholders (validators or agents).
Now I use a real world example to compare internet bonds.
In many parts of the world, construction professionals must purchase a contractor's license bond before the law allows them to perform construction work. By purchasing this security deposit, building professionals agree to work within bylaws designed to protect government agencies and consumers from potential financial loss.
The contractor license deposit is a type of guarantee deposit, in which:
Principal: An entity seeking a work permit by providing capital and agreeing to a set of rules.
Creditor: An entity that sets the requirements for a bond under a set of rules and guarantees.
Issuer: The entity that guarantees the performance of the principal's obligations.
In the crypto space, as well as Proof-of-Stake (PoS), a pledge bond can be thought of as a kind of contractor's license bond. For example, Ethereum verifiers need to pledge 32 ETH as collateral to register their nodes on the network, and accordingly they will obtain a "license" to support their on-chain consensus operations.
With this "licence", the validator agrees to abide by the rules of the network, which is to perform their duties honestly on the chain and to ensure their continuous operation on the chain. Accordingly, they are regularly rewarded with benefits.
In this case, a bond is an agreement between:
Delegator: Validator
Creditors and Issuers: The Ethereum Blockchain
In this example, Ethereum acts as both creditor and issuer. That is, it programmatically specifies and enforces a set of rules to maintain the integrity of the network. Validators who perform their duties will be rewarded as an incentive, while those who fail to meet operational requirements or behave maliciously will risk being fined, forfeited their pledge deposits and/or losing their right to participate (slashing).
Therefore, in an abstract sense, pledged positions can be seen as a type of Web3.0 digital work agreement, which has a similar behavior pattern to bond structures in the traditional financial world.
So what's the main difference between the two?
Holders of Internet bonds in Web 3.0 are also lenders of capital, labor, and always owners of the network.
Internet bonds are therefore a new type of incentivized digital work agreement that, in its mature state, can be described as a hybrid perpetual bond with debt- and equity-like characteristics.
Eth2 Internet Bonds
we publishwhite paperwhite paper
The use of the Ethereum 2.0 protocol to demonstrate the application of the proposed conceptual framework aims to allow everyone to better understand, evaluate, and plan for the Ethereum 2.0 participation market.
This white paper focuses on the early stages of Eth2 and predicts what the future of Eth2 Internet bonds will look like. The research highlights include:
Value value
Rewards
Modeling Eth2 Internet Bond Behavior
image description
Figure: Overview of Eth2 Internet Bond ValueSince the recently releaseddeposit contract
, validators can now deposit 32 ETH directly to the protocol, or deposit small amounts of ETH through escrow intermediaries (staking pools). Deposits are done by sending a one-way transaction to the deposit contract on the Eth1 chain. Since Phase 0 will serve as the initial startup phase of Eth2, the initial pledged deposits and corresponding rewards will not be withdrawn until after Phase 1.5.So we can start with Eth2 internet bonds as a deferred rewards protocol. It is important to note that a deferred interest bond is a debt agreement in which accrued interest is only paid in full when due. Deferred interest instruments are usuallyIssued and traded to compensate stakers for delayed returns and lack of liquidity during this period. Consequently, the value of the asset eventually converges to par value at maturity.
image description
Figure: Discount Rate of Eth2 Internet Bonds
In phase 1.5 after phase 1, the Eth1 chain will be migrated to one of the shards of Eth2.
Perpetual financial agreements (such as Eth2 Internet Bonds) will provide permanent rewards to participants who contribute to public infrastructure, but do not include maturity dates.
Figure: Valuing Internet Bonds in Phase 1 and Beyond
Summarize
Summarize
Participation in the base layer of Web 3.0 represents participation in a new digital work protocol between global participants and a decentralized internet protocol designed to provide trustless value transfers available to anyone.
This model shows us the value of learning from old things, because we can better understand new things from the relevance of new and old things.
Disclaimer: ECN's translation work aims to deliver high-quality information and learning resources for the Chinese Ethereum community. The copyright of the article belongs to the original author. Reprints must indicate the source of the original text and ethereum.cn. For long-term reprints, please contact ethereumcn@gmail.com Authorize.
Disclaimer: ECN's translation work aims to deliver high-quality information and learning resources for the Chinese Ethereum community. The copyright of the article belongs to the original author. Reprints must indicate the source of the original text and ethereum.cn. For long-term reprints, please contact ethereumcn@gmail.com Authorize.
