Original source: Bankless, Ryan Sean Adams, original compilation: 0x26, reprinted by Odaily Planet Daily with permission.
The Ethereum 2.0 pledge/distribution model is like a decentralized bond issuance. Based on this, a global decentralized economic system built on the Internet can be constructed.
But the public is just beginning to realize this possibility.
He published a sum on Ethereum 2.0. They treat the pledged ETH as a bond. This model helps investors understand ETH from the perspective of perpetual bonds known to the public, this revolutionary Internet-native asset.
This is very interesting, so we worked with them to create a summary.
Ethereum 2.0: Bonds in the Internet Age
Before the invention of blockchain, it was not easy for companies or individuals to directly participate in or access financial information at the basic level of the Internet.
The advent of Web 3.0 changed this. Participants anywhere in the world are now likely to be exposed to the open source network economy through a new generation of digital work agreements-Internet bonds.
Understanding its basic attributes is a key step in creating better valuation and product models around it. In a mature state, the rate of return of the new Internet settlement layer can become the risk-free rate of return of a decentralized financial ecosystem, and it can also be used as a benchmark for evaluating the cost of value transfer without trust. (Note that the risk-free interest rate refers to the interest rate that can be obtained by investing funds in a certain investment object without any risk. This is an ideal investment income. Generally affected by the benchmark interest rate.)
As Internet bonds become more and more popular, the creation of a generic and understandable proprietary term around this bond is very important for the promotion and use on a global scale.
What are Internet bonds?
Nowadays, one of the most popular blockchain protocols is to mortgage assets and then generate workload to obtain income. This is known as “staking”.
Similar to the traditional bond structure, there are many forms of pledge, but the core is the agreement between the bond issuer (the party to the agreement) and the bond holder (the verification node or the entrusted node).
Let’s use an analogy in the non-digital world.
In many parts of the world, construction professionals are required to purchase contractor license guarantees before they can legally carry out construction work. Through the contractor’s license bond system, construction professionals agree to work under the rules and regulations designed to protect government agencies and consumers from potential economic losses.
Contractor license guarantee is a form of guarantee guarantee:
1. Client: An enterprise that seeks a work permit by providing funds and agreeing to a series of rules.
2. Creditor: A unit that formulates margin requirements in accordance with a set of rules and a guarantor.
3. Issuer: An entity that guarantees principal obligations.
In the world of POS (Proof of stake) cryptocurrency, pledged bonds can be regarded as a contractor license bond. For example, the Ethereum verification node is required to hold 32 Ethereum as collateral to register its node on the network, and in return the node to obtain a “license” to support consensus operations on the chain.
In order to obtain this license, the verification node needs to agree to abide by the rules of the network, which is to act honestly and guarantee continued operation. In return, they will be rewarded regularly.
In this case, the bond is an agreement reached by:
4. The principal, the verifier.
5. The right holder and issuer, namely the Ethereum blockchain.
In this example, Ethereum acts as both a creditor and issuer. That is, it defines and enforces defined rules programmatically to maintain the integrity of the network. Verification nodes fulfill their obligations to obtain incentive rewards, and those verification nodes that do not meet their requirements or have malicious behavior face the risk of punishment, confiscation, and/or loss of participation rights.
In general, the pledge system can be regarded as a Web3.0 digital work agreement, similar to the bond structure in the traditional financial world, and has a similar behavior pattern.
So what are the main differences?
Internet bond holders in Web3.0 are capital lenders, workers and network owners at the same time.
Therefore, Internet bonds are a new type of incentive digital work agreement. In a mature state, it is best described as a perpetual bond that combines the characteristics of bonds and equity.
Ethereum 2.0 Internet Bond
Due to the characteristics of the open source protocol and the constantly changing attributes related to the phased launch of Ethereum 2.0, the Ethereum 2.0 network bond behaves like an evolutionary asset.
To better understand, evaluate and plan the conceptual framework of participating in the Ethereum 2.0 pledge market. We released a model built using the Ethereum 2.0 protocol model.
Specifically, this white paper focuses on the early stages of Ethereum 2.0 and predicts the possibility of Ethereum 2.0 network bonds. Focus areas include:
1. Value
2. Rewards
3. Network status
Research on Behavior Model of Internet Bond
Overview of the value of Ethereum 2.0 Internet bonds
With the recent launch of the deposit contract, validating nodes can now deposit 32 Ethereum directly to the agreement, or deposit less than 32 Ethereum through an escrow intermediary. The deposit is done through a one-way transaction to a smart contract on the Ethereum 1.0 chain. Since stage 0 is only the initial start-up stage, the transfer of deposits and cumulative rewards before stage 1.5 will be restricted.
Therefore, the blueprint for the Internet bond of Ethereum 2.0 started as a deferred payment agreement. It is worth noting that a deferred interest bond is a debt agreement that only pays interest in full when it is due. Deferred interest instruments are usually issued at large discounts and traded to compensate holders for deferred income and insufficient liquidity during this period. Therefore, the value of the asset eventually converges to face value at maturity. (Rhythmic note, that is, the price will continue to move closer to the face value as the date approaches)
The value of Ethereum Internet bonds at stage 0
The discount rate of Ethereum 2.0 bonds
After the first stage, the main network will transition to the 1.5 stage, which is characterized by the gradual transfer of the Ethereum 1.0 chain to Ethereum 2.0.
In stage 1.5, verification nodes will be able to withdraw deposits and receive rewards. With the successful transfer of the Ethereum 2.0 main network, the nature of bonds has changed from a deferred structure, and is closer to a long-term agreement with the characteristics of bonds and stocks.
Perpetual financial agreements, like Internet bonds such as Ethereum 2.0, continuously provide rewards for proof of work, but do not include expiration dates. (Rhythmic note, the price is equal on the expiry date)
The value of Ethereum 2.0 bonds in the first phase and beyond
to sum up
Participating in the underlying protocol of Web3.0 means participating in a new type of digital protocol that can be used to transfer value without trust between global participants and decentralized network protocols.
Internet bonds are a brand-new asset in the financial market. It allows anyone in the world to invest, participate, and profit from the open source, decentralized digital economy.
At the same time, this model illustrates the value of finding and using the relevance of old things to understand new things.
The era of Internet bonds is coming.
