2.3 Incentives

Introduction

Economics 101 teaches that incentives are the backbone of consumer choices. Economics assumes that agents are rational decision-makers according to the incentives of their surroundings. Ethereum is designed in such a way to promote integrous behavior and punish bad behavior for a sustainable model.

Learning Objectives

• Understand the basics internet bonds and practical uses

• Be able to describe and assess economic implications of internet bonds

Reading List

• Economic incentives of Eth 2.0

• Ethereum WebAssembly (ewasm)

• Ethereum 2.0 Migration Economics

• Coinmonks

• What is Ethereum 2.0 and Why Does It Matter?

Key Points

• Web 3.0

  • the third generation of internet services

  • distinguishes itself from Web 2.0 with its developments in machine learning, artificial intelligence, enhanced security, decentralized structure, and advanced connectedness

• Internet Bond

  • decentralized bond structure made possible through the advent of Web 3.0 and Eth 2.0

  • require a deposit of 32 ETH as collateral, creating a contract that promises rewards based on participation in the network

Review Questions

• How are incentives aligned in Ethereum to promote good behavior and punish bad behavior?