A Dominant Strategy in game theory refers to an action a player can take that yields the best outcome for them, regardless of the choices made by other players. This strategy provides a consistent advantage, making it the most rational choice in a given interaction. Identifying a dominant strategy simplifies decision-making in competitive or cooperative environments. It is a fundamental concept for analyzing strategic interactions in various systems.
Context
In blockchain protocol design, identifying or designing for a Dominant Strategy is critical for ensuring network security and participant alignment. For instance, in proof-of-stake systems, a well-designed incentive structure should make honest validation a dominant strategy for stakers. The absence of such a strategy can lead to undesirable outcomes, including network instability or collusion.
No deterministic transaction fee mechanism can be simultaneously user-incentive compatible, miner-incentive compatible, and collusion-resistant without being trivial.
The SAKA mechanism explicitly integrates MEV searchers into transaction fee design, circumventing impossibility results to ensure full incentive-compatibility.
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