1.1 Internet Bond

Introduction

Stated simply, internet bonds add to the globalized, secure, and preexisting decentralized economy by providing a new bond agreement structure for financial assets entirely through the advent of Web 3.0. The emergence of Internet Bonds can be made through Ethereum staking. When staked, the Ether you hold is not merely a virtual commodity anymore, but can accrue yields akin to financial assets. Further, Internet Bonds are particularly alluring when juxtaposed with traditional bonds because they provide the basis for risk-free rates. In Ethereum’s mature state, the anticipated rate of return is estimated at 3%-5%, whereas traditional bonds are subject to low or negative interest rates.

Learning Objectives

• Understand the basics internet bonds and practical uses

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

Reading List

• Liquid Staking Research Report

• Nothing-at-Stake Problem - Glossary

• ETH: The Internet Bond Bankless

• Internet Bonds: Bridging the Gap Between Proof of Stake and Traditional Finance

• StakeFi Internet Bonds Explained

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

• What are internet bonds and what are its main economic implications?

• What are the main appeals of internet bonds?

• What are some concerns about PoS?