@donhylo

@donhylo

# cooperation

Hobbes > Locke > Smith > Hayek > ?

@donhylo

@donhylo

# planning

### manually adjust supply & demand

• lack of information from the planner
• lack of motivation from the planner

### prices

a decentralised system of information and motivation at the same time

@donhylo

## Hayekians

markets are efficient

prices transmit information

limited role of the government

opposed to government–backed money in favour of commodity–backed money

## NON–HAYEKIANS

neo–classical school of economics

markets don't work in an idealised way

attention to information asymmetry

attention to the condition of ‘market failure’

economic models make the world, they don’t describe it

@donhylo

@donhylo

### cryptoeconomics what is the game

do we want to include non–for–sale production or intangible things produced into 'what counts' in the economy?

do we want to try to measure output (what is valued and how it is produced) in new ways?

or do we want to stay in a culture of production for profit only?

do we want to enable people to trade in new ways?

@donhylo

### cryptoeconomics a new discipline | network science

emerging solutions

packed with probability distributions

the danger of making predictions

nonlinear interactions

complex systems

contagious effect

wisdom and/or madness of the crowd

bonding and bridging

@donhylo

@donhylo

@donhylo

@donhylo

@donhylo

@donhylo

players

decisions

@donhylo

# private information

(preferences or types)

@donhylo

players

decisions

information

@donhylo

### cryptoeconomics mechanism design | private information

normal distribution

discreet distribution

uniform distribution

# Common Prior

a probability distribution over private information (types)

@donhylo

type 1

type 2

type 3

type N

@donhylo

@donhylo

# Social Choice Function

## diserable outcome

what people actually want

@donhylo

## the desirable outcome

@donhylo

@donhylo

### cryptoeconomics mechanism design

(N, X*\mathbb{R}^n, \Theta, p, u)
$(N, X*\mathbb{R}^n, \Theta, p, u)$

Bayesian game setting

(A, M)
$(A, M)$

mechanism

social choice function

C
$C$

given a bayesian game setting, it is said that a mechanism implements a social choice function in dominant strategies or in Bayes–Nash equilibrium

@donhylo

## dominant strategies

this holds for the agent regardless of the strategies of other agents

## Bayes–Nash equilibrium

no player has profitable deviations based on their beliefs about other players’ types and
the strategies of those players

@donhylo

# Revelation Principle

@donhylo

### cryptoeconomics mechanism design | REVELATION PRINCIPLE

what does this even mean?

@donhylo

@donhylo

# Pareto efficiency

My mom packed me a ham sandwich for lunch but I don’t like ham; my friend’s mom packed her a turkey sandwich for lunch, and she likes turkey and ham sandwiches equally well. Nobody else cares what we eat for lunch.

My friend and I trade sandwiches; I am better off than I was before, and nobody is worse off. This is an example of a Pareto improvement.

@donhylo

@donhylo

@donhylo

@donhylo

## 2

### token engineering

BY ADDING ENGINEERING THEORY, PRACTICE AND TOOLS

@donhylo

## FORMULATE THE PROBLEM

### cryptoeconomics token design | token engineering

THEN, TRANSLATE THOSE INTO OBJECTIVES AND CONSTRAINTS

@donhylo

Stakeholders What do they want? What value do they provide​? ​What might they get in return?
Users
Contributors
Clients
Investors

@donhylo

@donhylo

## objective function

e.g the purpose of the token is
to maximise the amount of X
available to the end users

@donhylo

## constraints

e.g. conditions upon which tokens are used as rewards

e.g. requirements for using the token

@donhylo

# Token ecosystem

@donhylo

@donhylo

### A DEVELOPING ECOSYSTEM

READY TO USE AND ACCEPT IT

## 2

### A UTILITY FUNCTION

TO CORRELATE VALUE WITH FUNDAMENTAL VALUES OR BELIEFS

### AN INSTRUMENT

DIGITAL, SECURE, TRUSTLESS AND GLOBALLY ACCESSIBLE

@donhylo

@donhylo

@donhylo

@donhylo

By Laurent Hardy

# Token Based Economic Networks

What are token-based economic networks? How social order, a balance between collaboration and cooperation, has been achieved historically and where does cryptoeconomics fit in this context to foster innovation in the way economies are organised? What are the super powers of mechanism design? How it works and what role do tokens play? What is the state of the art of the tooling used in mechanism design, i.e Token Engineering?

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