Cryptoeconomic Concepts from Vitalik

These concepts were pulled from Vitalik's talk on cryptoeconomics from Edcon.. Some notes may be missing

Economics Tools

• Tokens: Incentivize actors by assigning them units of a protocol-defined cryptocurrency
  • Eg. Blog rewards
• Privileges: Incentivize actors by giving them decision-making rights that can be used to extract rent
  • Eg. Transactions
  • If you have a block, and you can include transactions, you can use your $ to bribe the block creators to include your transaction / choice.
    • Basically, limited space, you can pay to have voting rights on what the future state should look like

Concepts

• Cryptoeconomic security margin: Amount of money x such that "either a given guarantee G is satisfied, or those at fault for violating G are poorer than they otherwise would have been at least X
• Cryptoeconomic proof: a message signed by an actor that can be interpreted as "I certify that either P is true, or i suffer an economic loss of size X"
• Uncoordinated choice model: a model that assumes that all participants in a protocol do not coordinate with each other and have separate incentives, and are all smaller than size X
  • Competitive game theory
• Coordinated choice model: a model that assumes that all actors ina protocol are controlled by the same agent (or coalition)
  • Cooperative game theory
• Bribing attacker model: a model that starts off with an uncoordinated choice assumption, but also assumes that there is an attacker capable of making payments to actors conditional on them taking certain actions
  • Budget

P + epsilon attack

• A bribing attacker can corrupt the Schellingcoin game with a budget of P + ϵ and zero cost!

Griefing factors

• Even in an incentive-compatible protocol, there will almost always be opportunities to, at some cost to yourself, impose costs on others
  • How much you make other people lose / how much you lose
    • High is bad