Author: eric at voskuil.org 2022-05-18 03:06:29
Published on: 2022-05-18T03:06:29+00:00
In a recent conversation, the use of principal in lending and borrowing scenarios was discussed. The lender provides the principal and is paid interest in exchange while the borrower uses the principal to generate income by producing goods, selling them, and returning the profit as interest to the lender. However, in a scenario where the principal is used as a billboard for an advertisement, it is not being used as money. Instead, a fidelity bond is used to back a "you can totally trust me I am not a bot!!" assertion. In this case, the funds are never transferred, and a different use of the locked funds is invented. The term "fidelity bond" is accepted, but it is a misleading analogy since proof of burn/work is merely a demonstration of a prior expense. For the burn to be provably non-dilutable, it must be a cost provably associated with the scenario that relies upon the cost.
Updated on: 2023-06-15T20:08:31.990065+00:00