Economic Protocol Design

Definition ∞ Economic Protocol Design involves the careful construction of incentive structures and rules within a blockchain protocol that align participant behavior with the network’s overall security and operational objectives. This discipline applies game theory principles to create stable and secure decentralized systems. It shapes how participants interact.
Context ∞ The stability and security of decentralized networks depend significantly on effective economic protocol design, which discourages harmful actions and rewards beneficial participation. Discussions in crypto news frequently analyze the efficacy of different incentive models. This analysis is especially pertinent during periods of network stress or proposed upgrades, ensuring long-term system health.