"The Internet Bond: the risk-free rate for a decentralised financial ecosystem

Until the invention of public blockchains, it was not obvious for entities or individuals to participate directly or gain financial exposure to the Internet's core layer. The advent of Web3 changes this and now allows participants from all over the world to gain exposure to the open-source web economy through a new generation of 'digital work' agreements. Today, these most common agreements involve the pledging of value to provide security work in exchange for rewards, which is widely known as "staking". Similar to traditional government bonds, staking comes in several variants, but essentially represents an agreement between the bond issuer (the protocol) and the bondholder (the validator or delegate). The bondholder lends resources in return for periodic incentive payments known as 'rewards'. (...) In the medium term, the reward rate of the internet's new settlement layer could become the risk-free rate of a decentralised financial ecosystem and a benchmark for assessing the cost of transferring value without intermediaries.

Mara Schmiedt, "The Internet Bond", August 2020

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