https://newsletter.banklesshq.com/p/eth-the-internet-bond

Level up your crypto finance game five times a week. Get on the Bankless Program.

Dear Bankless Nation,

And the launch of Eth2 staking is like the bond offering for the decentralized economy. A decentralized, global economy entirely built on the internet.

And people are just starting to wrap their heads around it.

Our friends Collin Myers and Mara Schmiedt just published a full whitepaper and a financial model on Eth2 and its economics.

They modeled staked ETH as a bond. This model helps investors understand ETH as a revolutionary new internet native asset type through the lens of assets they already know—perpetual bonds.

We love it so much we teamed up with them to put together an executive summary.

Welcome to the dawn of the internet bond.

• RSA

🙏Sponsor: Aave—earn high yields on deposits & borrow at the best possible rate!

A Whitepaper on Digital Work Agreements in the Web3.0 Era

Until the invention of public blockchain networks, it has not been easy for entities or individuals to directly participate in or obtain financial exposure to the base layer of the internet.

The arrival of Web3.0 changes this. Now, it’s possible for participants anywhere in the world to get exposure to the open-source web economy through a new generation of digital work agreements—Internet Bonds.

Understanding the fundamental properties of this new type of agreement is a critical first step in creating better models, valuation and products around it. In a matured state, the yield of the internet’s new settlement layer can become the risk free rate of a decentralized financial ecosystem and a benchmark for valuing the cost of trustless value transfer.

As internet bonds grow in popularity, creating a shared terminology and understanding around them will be critical to global adoption.

Today, the most popular digital work agreements involve collateralizing value for the right to provide work and earn rewards. This is widely known as ‘staking’.

Similar to traditional bond structures, staking comes in a variety of flavors, but at its core represents an agreement between the bond issuer (the protocol) and the bond holder (the validator or delegator).

Let’s draw an analogy from the non-digital world.