What is the Internet bond?

The term "Internet bond" refers to the concept of using Ethereum's staking mechanism as a financial model similar to traditional bonds but adapted for the digital, decentralized landscape. In the context of Ethereum, when you stake Ether (ETH), you secure the network and earn yield, similar to earning interest on a bond. This yield comes from transaction fees generated by activities on the Ethereum network. This analogy helps in understanding the role of ETH in the financial ecosystem of decentralized finance (DeFi), likening it to a bond issued by a sovereign state but operated in a decentralized, digital framework 1.

The concept of the Internet bond extends to the general idea that through blockchain technology, particularly Ethereum, we can create "bonds" that are natively digital and operate on a global scale, not bound by the traditional constraints of national economies or physical borders. This model reflects a shift towards an economy where digital assets and decentralized systems play a central role in defining value and securing transactions.