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From: Eric Voskuil <eric@voskuil.org>
Mime-Version: 1.0 (1.0)
Date: Tue, 3 May 2022 11:26:52 -0700
Message-Id: <48D4B621-D862-4031-AE43-3F54D34FB0B5@voskuil.org>
References: <f3892570-6c45-47ee-2804-9988ff18bdf5@riseup.net>
In-Reply-To: <f3892570-6c45-47ee-2804-9988ff18bdf5@riseup.net>
To: Chris Belcher <belcher@riseup.net>,
 Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP proposal: Timelocked address fidelity bond
	for BIP39 seeds
Precedence: list

It looks like you are talking about lending where the principal return is gu=
aranteed by covenant at maturity. This make the net present value of the loa=
n zero.

e

> On May 3, 2022, at 11:03, Chris Belcher via bitcoin-dev <bitcoin-dev@lists=
.linuxfoundation.org> wrote:
>=20
> =EF=BB=BFHello ZmnSCPxj,
>=20
> Such a system will have to be publicly advertised, in the same way we see c=
entralized cryptocurrency staking shops buying ads all over the place. That'=
s how they'll make retail hodlers aware that renting out your coins in this w=
ay is possible. If JoinMarket/Teleport users notice such ads appearing then w=
e could change the taker code to remove the intermediate certificate keypair=
, and have the fidelity bond UTXO key sign the endpoint (IRC nickname or oni=
on hostname) directly. This removes the possibility of fidelity bonds in col=
d storage. It would have to be done for privacy, and it wouldn't be too bad.=
 Right now there's no cold storage solution for fidelity bonds yet JoinMarke=
t has about 600 bitcoins locked up and advertised, which must be all on hot w=
allets.
>=20
> Best,
> CB
>=20
>> On 03/05/2022 06:26, ZmnSCPxj wrote:
>> Good morning Chris,
>>> Hello ZmnSCPxj,
>>>=20
>>> Renting out fidelity bonds is an interesting idea. It might happen in
>>> the situation where a hodler wants to generate yield but doesn't want
>>> the hassle of running a full node and yield generator. A big downside of=

>>> it is that the yield generator income is random while the rent paid is a=

>>> fixed cost, so there's a chance that the income won't cover the rent.
>> The fact that *renting* is at all possible suggests to me that the follow=
ing situation *could* arise:
>> * A market of lessors arises.
>> * A surveillor creates multiple identities.
>> * Each fake identity rents separately from multiple lessors.
>> * Surveillor gets privacy data by paying out rent money to the lessor mar=
ket.
>> In defiads, I and Tamas pretty much concluded that rental would happen in=
evitably.
>> One could say that defiads was a kind of fidelity bond system.
>> Our solution for defiads was to prioritize propagating advertisements (ro=
ughly equivalent to the certificates in your system, I think) with larger bo=
nded values * min(bonded_time, 1 year).
>> However, do note that we did not intend defiads to be used for privacy-se=
nsitive applications like JoinMarket/Teleport.
>> Regards,
>> ZmnSCPxj
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