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Date: Tue, 3 May 2022 19:03:12 +0100
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To: ZmnSCPxj <ZmnSCPxj@protonmail.com>
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From: Chris Belcher <belcher@riseup.net>
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Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP proposal: Timelocked address fidelity bond
 for BIP39 seeds
Precedence: list

Hello ZmnSCPxj,

Such a system will have to be publicly advertised, in the same way we 
see centralized 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 way is possible. If JoinMarket/Teleport users notice 
such ads appearing then we could change the taker code to remove the 
intermediate certificate keypair, and have the fidelity bond UTXO key 
sign the endpoint (IRC nickname or onion hostname) directly. This 
removes the possibility of fidelity bonds in cold 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 JoinMarket has about 600 
bitcoins locked up and advertised, which must be all on hot wallets.

Best,
CB

On 03/05/2022 06:26, ZmnSCPxj wrote:
> Good morning Chris,
> 
>> Hello ZmnSCPxj,
>>
>> 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 following 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 market.
> 
> In defiads, I and Tamas pretty much concluded that rental would happen inevitably.
> One could say that defiads was a kind of fidelity bond system.
> Our solution for defiads was to prioritize propagating advertisements (roughly equivalent to the certificates in your system, I think) with larger bonded values * min(bonded_time, 1 year).
> However, do note that we did not intend defiads to be used for privacy-sensitive applications like JoinMarket/Teleport.
> 
> 
> Regards,
> ZmnSCPxj