Hi guys,

I was reading Shen's recent blogpost about the flaw in ShadowCash. At the bottom of the article some bounties for pointing out errors were mentioned.

Wouldn't it be cool/important/useful if Monero also offered some bounties so external people are incentivized to check the Monero ptrocol? It would give positive exposure to Monero and it would strengthen the protocol. In stead of attacking the network, people would be wise to just tell the core team about the exploit they just found.

So, then I was thinking about how to set it up... The obvious route is to just use the forum funding system to crowdfund these bounties.

But this seems like an strange idea if you think about it: who will lock up their money indefinitely so the bounty money is always available?

So then I thought about just asking people to put in some money for a specified period, for example one year. But this also seems a bit strange. Why would you do that? Yeah, you are supporting XMR by doing this, but locking away a few BTC with the risk of loosing them because the money will be used to pay out bounties isn't very appealing. I don't expect a lot of people to do that.

There was something missing: an incentive to lock your money!

That's why I propose the idea to create "Monero Bounty Bonds":

First we determine how much money we want for our bounties and which bounties we want to provide Then we auction the bonds. We let people bid on the amount of XMR they want to receive per mBTC they lock for a year We use the forum funding system to crowdfund the interest after a year.

This system would mean that bonds would gain value over time if the protocol is strong (I'm assuming stable BTC/XMR rate here): imagine you get 10% in a year. After 6 months of zero bounty payouts, the risk to for a payout to happen became smaller => making profit on your bond is more likely an your bond should be worth about 5% above par.

benefits:

we can crowdfund a larger amount of BTC for paying out bounties because the investors are incentivized

people who have a good understanding of the protocol can "put their money where their mouth is"

if you are a bounty hunter, you can even buy a bond yourself. When you found an exploit, you can try to sell your bond on the market and then reveal the exploit and profit twice.

on a sidenote: it would be interesting to see the interest rate go down overtime. This would mean that the trust in the Monero protocol is going up.

Thoughts?