Blockchain token economics: A mean-field-type game perspective

Julian Barreiro-Gomez; Hamidou Tembine

doi:10.1109/ACCESS.2019.2917517

Blockchain token economics: A mean-field-type game perspective

Julian Barreiro-Gomez, Hamidou Tembine

Research output: Contribution to journal › Article › peer-review

Abstract

This paper studies the blockchain cryptographic tokens by means of mean-field-type game theory. It introduces the variance-aware utility function per decision-maker to capture the risk of cryptographic tokens associated with the uncertainties of technology adoption, network security, regulatory legislation, and market volatility. We establish a relationship between the network characteristics, token price, number of token holders, and token supply. Both in-chain diversification and cross-chain diversification among tokens are examined by using a mean-variance approach. The results suggest that the number of tokens in circulation needs to be adjusted in order to capture risk-awareness and self-regulatory behavior in blockchain token economics. The Sharpe and Modigliani ratios for cryptographic tokens are revisited.

Original language	English (US)
Article number	8717636
Pages (from-to)	64603-64613
Number of pages	11
Journal	IEEE Access
Volume	7
DOIs	https://doi.org/10.1109/ACCESS.2019.2917517
State	Published - 2019

Keywords

Blockchain
game theory
mean-field
network economics
risk
token

ASJC Scopus subject areas

General Computer Science
General Materials Science
General Engineering

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10.1109/ACCESS.2019.2917517

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title = "Blockchain token economics: A mean-field-type game perspective",

abstract = "This paper studies the blockchain cryptographic tokens by means of mean-field-type game theory. It introduces the variance-aware utility function per decision-maker to capture the risk of cryptographic tokens associated with the uncertainties of technology adoption, network security, regulatory legislation, and market volatility. We establish a relationship between the network characteristics, token price, number of token holders, and token supply. Both in-chain diversification and cross-chain diversification among tokens are examined by using a mean-variance approach. The results suggest that the number of tokens in circulation needs to be adjusted in order to capture risk-awareness and self-regulatory behavior in blockchain token economics. The Sharpe and Modigliani ratios for cryptographic tokens are revisited.",

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AB - This paper studies the blockchain cryptographic tokens by means of mean-field-type game theory. It introduces the variance-aware utility function per decision-maker to capture the risk of cryptographic tokens associated with the uncertainties of technology adoption, network security, regulatory legislation, and market volatility. We establish a relationship between the network characteristics, token price, number of token holders, and token supply. Both in-chain diversification and cross-chain diversification among tokens are examined by using a mean-variance approach. The results suggest that the number of tokens in circulation needs to be adjusted in order to capture risk-awareness and self-regulatory behavior in blockchain token economics. The Sharpe and Modigliani ratios for cryptographic tokens are revisited.

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Blockchain token economics: A mean-field-type game perspective

Abstract

Keywords

ASJC Scopus subject areas

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