Cryptoeconomics

BlockworksAug 20, 2019 ⋅ 1 min read

Written by Steve Miller

Introduction

Cryptoeconomics is the application of mechanism design using the disciplines of economics and cryptography to build decentralized applications and protocols.

Decentralized protocols require the ability to coordinate state among network actors with unknown intentions. To achieve this they require a combination of properly designed economic incentives and secure ways to store data and communicate with the protocol. Economic incentives generally take two forms: rewards and penalties. For example, in Proof-of-Work assets, miners are rewarded with tokens via inflation and penalized through the required hardware and energy costs. These incentives are designed to make the default action of any economically rational actor to behave in order to profit.

Suggested Reading

Making Sense of Cryptoeconomics by Josh Stark

What is Cryptoeconomics? by Ameer Rosic

Let us know what you loved about the report, what may be missing, or share any other feedback by filling out this short form. All responses are subject to our Privacy Policy and Terms of Service.

Suggested Research Based on your Watchlists

Create a new watchlist
Outline
  • Introduction
  • Suggested Reading