Internet Bonds: The Best Way to Earn With Avalanche

This post was originally published here

Franciska Kovacs

Sep 10 · 5 min read

Avalanche Internet Bonds from Ankr StakeFi offer instant liquidity for your staked AVAX and enable you to earn in more places simultaneously.

The Avalanche Platform

Avalanche has gained massive traction lately as a blockchain development platform for building smart contracts, dApps, and custom blockchains. The attraction of building on Avalanche lies in its formidable throughput capabilities (about 300 times Ethereum’s) and “blazingly fast” transaction speed finality (under two seconds).

These attributes are making Avalanche one of the best options for developers who need a more scalable solution for heavy network use. This will be very attractive for those building in areas like DeFi, NFT markets, and even institutional and government use cases.

Avalanche also has thousands of nodes that validate its Proof-of-Stake network, which means there is ample opportunity to become involved in staking AVAX, the Avalanche token.

What Are Avalanche Internet Bonds?

The goal of Ankr’s StakeFi platform is to provide everyone with easy access to attractive streams of passive income. We are doing just that with Avalanche Internet Bonds.

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Avalanche Internet Bonds are the next evolution of liquid staking. Normally, when you contribute (stake) tokens to secure PoS blockchains, you will need to lock up your tokens with the network. This is a problem as your assets are now “illiquid,” or unavailable to spend or earn in other places. This is sometimes the price paid for earning an APR with some financial strategies.

However, with internet bonds, Ankr will stake your AVAX tokens with our validator nodes while giving you back aAVAXb bond tokens. This is a reward-earning bond token that will distribute staking rewards to your wallet daily. In other words, your wallet’s aAVAXb balance will increase every day.

In addition to earning staking rewards, you can use aAVAXb to generate even more passive income when using it to perform liquidity mining, lending, and other strategies on DeFi platforms like Uniswap or Compound.

Benefits of Avalanche Internet Bonds

One of the biggest benefits of Internet Bonds is the ability to use them in several DeFi platforms, like Uniswap, Sushiswap, Curve Finance, and PancakeSwap. You can trade your aAVAXb tokens or use them for other earning strategies like liquidity mining and lending. This way, you will be able to multiply your potential for passive income.

Your staking rewards will compound every two months as your wallet’s balance increases. This will rapidly improve your internet bond’s ROI.

Staking AVAX directly supports the Avalanche platform and helps validate transactions on the network. There is already $3,848,393 worth of AVAX staked with Ankrs validator nodes, providing a healthy contribution to the Avalanche chain.

Securing Avalanche Internet Bonds enables users to buy or sell aAVAXb at market price instantly on decentralized exchanges.

Unlike Ethereum 2.0 staking options, users will be able to trade in their aAVAXb tokens for their staked AVAX at any time on a one-to-one basis (1 AVAX = 1 aAVAXb). You may need to wait up to 14 days for this transaction to complete. However, during this process, your aAVAXb will continue to receive staking rewards and your aAVAXb balance will continue to grow until the end of the staking period.

Impermanent Loss is the temporary or unrealized loss that liquidity providers can experience due to price volatility in trading pairs. Impermanent loss can also refer to times when the value of pooled assets drops and liquidity providers would have been better off simply hodling tokens instead of pooling them. Internet Bonds offer a hedge against this by freeing up staked tokens to be traded at any time.

Three percent of the AVAX allocated to StakeFi will not be staked but instead supplied to a liquidity pool. This will enable users to instantly sell 1 aAVAXb against 1 AVAX, subject to the liquidity pool’s capacity.

Security & Safety

Unlike other options such as staking funds through a centralized crypto exchange, you can keep all funds in your private wallets and hold custody of your keys at all times.

Staking Vs. Internet Bonds

By now you may be wondering, “What’s the difference between Internet Bonds and normal staking on Avalanche?”

Here are the main differences:

Stakers:

  • Receive staking rewards, but without being able to benefit from the additional stream of passive income on top of staked tokens.
  • Suffer from capital inefficiency as the value of staked tokens cannot be reused for other purposes

Internet Bond Holders:

  • Receive an easier staking experience with no technical knowledge.
  • Gain access to enhanced market liquidity that allows users to buy and sell aAVAXb at market price instantly on decentralized exchanges.
  • Unlock the possibility to stack several streams of passive income on top of staking rewards thanks to DeFi (liquidity mining, farming, lending, vaults, and more) › Access to cross-chain staking rewards on Ethereum network
  • Gain a share of trading fees for providing liquidity for the AVAXb/AVAX pair on platforms like Pangolin and Lydia Finance, leading to a lower risk of impermanent loss.
  • Partake in farming and gain rewards on Liquidity Pool tokens through Lydia Finance.
  • Take trading opportunities like buying aAVAXb tokens at a discount and unstaking them at fair value.
  • In the near future, internet bond holders can access automated yield farming strategies (vaults) and potentially borrow against their aAVAXb assets to keep ownership.

Co-Own and Improve the Validation Process

Staking with Avalanche Internet Bonds allows you to co-own Ankr’s Avalanche validator nodes that power the network. By delegating your AVAX tokens, you support Ankr in making Internet Bonds a truly decentralized product. As we learn more about what it takes to run the highest-quality validator nodes, we can use our experience to select and whitelist other third-party node operators to join the ecosystem that will offer the best rewards for stakers. This way, Ankr will never centralize as a provider of nodes.

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