In the world of traditional finance, fixed-income assets have long been a cornerstone of investment portfolios. However, with central banks maintaining low-interest-rate policies for extended periods, the appeal of these traditional instruments has waned. The decentralized finance (DeFi) ecosystem now offers compelling alternatives, with staking rewards from Proof-of-Stake (PoS) networks emerging as one of the most stable passive income sources available.
Internet Bonds represent a digital-native evolution of fixed income—digital agreements that don't rely on traditional debt instruments. These innovative vehicles allow participants to leverage staked assets across multiple DeFi strategies to generate layered passive income streams beyond basic staking rewards, including liquidity mining, yield farming, and lending interest.
What Are Internet Bonds?
Internet Bonds are digital work agreements between Proof-of-Stake networks (bond issuers) and capital providers/stakers (bond holders). Bond holders contribute to network security by staking their tokens, gaining the right to support blockchain consensus operations in exchange for staking rewards. Participants can either run their own validation nodes or delegate this responsibility to professional node operators, receiving either fixed returns or a percentage of the staking rewards in return.
StakeFi serves as an Internet Bond launch platform that simplifies the staking experience while unlocking the liquidity of staked tokens through DeFi integration. By connecting staking rewards with decentralized finance opportunities, StakeFi creates new pathways for fixed income generation in the digital asset space.
Ankr's Infrastructure Expertise
With several years of experience supporting over 40 blockchain protocols with node deployment and professional infrastructure services, Ankr has established itself as a leading Web3.0 infrastructure provider. The company's StakeFi initiative focuses on three primary objectives:
- Reducing technical barriers associated with PoS protocol token staking
- Providing liquidity to Internet Bonds through DeFi integration
- Connecting staking rewards with DeFi to create multiple passive income opportunities beyond basic staking rewards
Core StakeFi Products and Offerings
Ethereum (ETH) Staking
Ankr ETH Internet Bonds benefit from liquidity across multiple decentralized exchanges (DEXs) including Uniswap, Sushiswap, Curve Finance, and BakerySwap. ETH stakers can access their staked value through aETHc or aETHb tokens, with liquidity pools growing alongside the circulating supply of these derivative assets. Beyond basic staking rewards, participants can potentially earn additional returns through:
- Liquidity pool trading fees
- Liquidity mining incentives
- Lending interest
StakeFi provides multiple interaction options for ETH staking:
Staking Services: Users can stake ETH and receive aETHc or aETHb tokens in return, with the option to unstake during Ethereum 2.0's Phase 1.5.
aETHc (Ankr ETH Interest-Bearing Token): This token accumulates staking rewards without distributing them, causing its fair value to increase over time as it incorporates undistributed ETH staking rewards.
aETHb (Ankr ETH Reward Bond): Rewards are distributed daily in the form of aETHb tokens through a rebase mechanism. Holders see their balance grow daily while maintaining a 1:1 fair value ratio with ETH.
Provider Node Services: For those wanting to run validation nodes, Ankr offers professional node deployment with slashing risk protection. Providers receive 15% of the 32 ETH staking rewards, with insurance payable in ETH or ANKR tokens.
Avalanche (AVAX) Staking
Avalanche token holders can stake AVAX through Ankr StakeFi to receive aAVAXb tokens—reward-earning bonds similar to aETHb. AVAX staking rewards are distributed daily through rebase, meaning aAVAXb token balances increase daily in holders' wallets.
Unlike ETH staking, AVAX tokens can be unstaked during the staking period, providing aAVAXb holders with several redemption options:
Standard Unstaking: Users can unstake aAVAXb and wait 14 days to exchange 1 aAVAXb for 1 AVAX. During this period, unstaked aAVAXb continues to earn staking rewards.
Instant Liquidity Pool: ANKR token holders can access immediate liquidity based on pool capacity. The platform allocates 3% of AVAX tokens to maintain this instant liquidity pool rather than staking them. aAVAXb holders indirectly bear the cost of this liquidity provision—the opportunity cost of not staking 3% of AVAX—resulting in a total cost of approximately 4.94% (2% service fee plus 3% opportunity cost).
Futures Conversion: Users can exchange aAVAXb for Ankr Avalanche Futures (aAVAXf)—unique, non-fungible tokens (NFTs) with embedded maturity dates. These futures will be listed on Bounce Finance's Internet Bond futures market several weeks after bond issuance. Trading involves a 0.25% royalty fee for sellers and a 0.25% AUCTION token (Bounce's native token) transaction fee for buyers.
Kusama (KSM) Staking
Kusama Internet Bonds (aKSMb) function as reward-earning bonds with daily rebase distributions. Users can unstake/redeem aKSMb with a 7-day waiting period to exchange 1 aKSMb for KSM. The platform also offers a dedicated instant liquidity pool and Kusama Futures (aKSMf) tradable on Bounce Finance.
Bounce Finance's parachain crowdloan platform facilitates KSM token fundraising for projects participating in Kusama parachain auctions. In exchange, KSM capital providers receive Kusama Parachain Futures (aKSMpf), representing locked Kusama tokens during the parachain lease period if the project wins the auction. Ankr enables several use cases for these futures, including liquidity yield rewards, auction participation, and lending through secondary market liquidity.
Polkadot (DOT) Staking
Polkadot Internet Bonds operate similarly to Kusama bonds as reward-earning instruments, with two primary differences: a 28-day redemption period (instead of 7 days) and futures that don't automatically distribute yield rewards.
Ankr supports Bounce Finance's parachain crowdloan platform for issuing parachain bonds designed to distribute rewards directly to bond holders, eliminating the need for participants to engage in specific liquidity mining contracts to earn yields.
Binance Coin (BNB) Staking
Ankr plans to introduce staking services for BNB holders, with BNB Internet Bonds scheduled for future release. These will feature functionality similar to Avalanche bonds, providing layered reward opportunities through DeFi integration.
The Evolution of Digital Fixed Income
The emergence of DeFi has gradually shifted preference from Proof-of-Work (PoW) to Proof-of-Stake (PoS) protocols due to their profitability and user-friendly nature. Internet Bond holders function as capital lenders, workers, and PoS network owners simultaneously—a unique combination that creates a new category of incentivized digital work agreements with hybrid perpetual characteristics of both debt and equity instruments.
This innovative approach to digital fixed income represents a significant evolution in how participants can generate returns from their cryptocurrency holdings while contributing to network security and functionality.
Frequently Asked Questions
What are Internet Bonds?
Internet Bonds are digital agreements that allow token holders to stake their assets on Proof-of-Stake networks while maintaining liquidity through derivative tokens. These instruments enable participants to earn layered rewards through both staking and additional DeFi strategies.
How do reward distributions work?
Different bond types distribute rewards differently. Reward bonds (aETHb, aAVAXb, aKSMb) use daily rebase mechanisms to increase token balances, while interest-bearing tokens (aETHc) accumulate value without distribution, increasing their fair value over time.
What risks are involved with Internet Bonds?
While Internet Bonds offer attractive yield opportunities, participants should be aware of smart contract risks, slashing risks (mitigated through provider insurance), liquidity risks, and the opportunity costs associated with instant liquidity pools.
Can I access my staked assets immediately?
Most staking arrangements involve lock-up periods, but instant liquidity pools provide limited immediate access. The availability depends on pool capacity, and immediate redemptions may involve additional costs.
How do I choose between different bond types?
Your choice depends on your investment goals and liquidity needs. Reward bonds provide regular income through rebase mechanisms, while interest-bearing tokens may be preferable for those seeking capital appreciation without regular distributions.
What makes Internet Bonds different from traditional staking?
Traditional staking typically locks assets completely, while Internet Bonds maintain liquidity through derivative tokens that can be used across DeFi protocols for additional yield generation. 👉 Explore advanced staking strategies
Internet Bonds represent a significant innovation in the digital asset space, blending the security contributions of traditional staking with the yield opportunities of DeFi. As the ecosystem evolves, these instruments will likely play an increasingly important role in how participants generate returns from their cryptocurrency holdings while supporting blockchain network operations.