Foundations of Cryptoeconomic Systems

* Report : Foundations of Cryptoeconomic Systems. By Shermin Voshmgir and Michael Zargham. WU Vienna, Working Paper Series 1/20

URL = https://epub.wu.ac.at/7782/1/Foundations%20of%20Cryptoeconomic%20Systems.pdf

Summary

"Blockchain networks and similar cryptoeconomic networks are systems, specifically complex systems. They are adaptive networks with multiscale spatio-temporal dynamics. Individual actions may be incentivized towards a collective goal with “purpose-driven” tokens. Blockchain networks, for example, are equipped cryptoeconomic mechanisms that allow the decentralized network to simultaneously maintain a universal state layer, support peer-to-peer settlement, and incentivize collective action. These networks represent an institutional infrastructure upon which socioeconomic collaboration is facilitated – in the absence of intermediaries or traditional organizations. They provide a mission-critical and safety-critical regulatory infrastructure for autonomous agents in untrusted economic networks. Their tokens provide a rich, real-time data set reflecting all economic activities in their systems. Advances in network science and data science can thus be leveraged to design and analyze these economic systems in a manner consistent with the best practices of modern systems engineering.

Research that reflects all aspects of these socioeconomic networks needs

(i) a complex systems approach,

(ii) interdisciplinary research, and

(iii) a combination of economic and engineering methods,

here referred to as “economic systems engineering,” for the regulation and control of these socioeconomic systems.

This manuscript provides a conceptual framework synthesizing the research space and proceeds to outline specific research questions and methodologies for future research in this field, applying an inductive approach based on interdisciplinary literature review and relative contextualization of the works cited."

Contents

"This paper explores why the term “cryptoeconomics” is context dependent and builds up to providing complementary micro, meso, and macro definitions (Section 9). These context dependent definitions are the synthesis of examinations of cryptoeconomic systems in terms of complexity (Section 2), interdisciplinarity (Section 3), institutional (Section 4), coordination (Section 5), emergence (Section 6), network structure (Section 7), and tokenization (Section 8). The final section (10) focuses on potential research directions and serves as an outlook rather than a conclusion. It identifies potential future research areas that build on the assumptions and definitions provided in this paper."

(https://epub.wu.ac.at/7782/1/Foundations%20of%20Cryptoeconomic%20Systems.pdf)

Excerpts

Shermin Voshmgir and Michael Zargham:

"Cryptoeconomics is an emerging field of economic coordination games in cryptographically secured peer-to-peer networks. The term cryptoeconomics was casually coined in the Ethereum developer community, and is generally attributed to Vitalik Buterin. The earliest recorded citation is from a talk by Vlad Zamfir [Zamfir 2015], which was later loosely formalized in blog posts and talks by Buterin [Buterin 2017a], [Buterin 2017b]. The term has gained traction in the broader developer community [Tomaino 2017a] and in the academic community [Catalini and Gans 2016], but it still remains under-defined, possibly because it is often used in so many different contexts. Using the same term in different contexts leads to communication breakdowns and challenges when trying to come up with a rigorous definition of that term."

(https://epub.wu.ac.at/7782/1/Foundations%20of%20Cryptoeconomic%20Systems.pdf)