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Game Theory Model

Definition ∞ A game theory model is a mathematical framework used to analyze strategic interactions between rational agents. In cryptocurrency, these models help design protocols and incentive structures to ensure network security and participant cooperation. They predict behavior based on economic incentives and disincentives.
Context ∞ Game theory models are fundamental to the design and security of blockchain protocols, particularly in areas like consensus mechanisms, tokenomics, and decentralized governance. Developers employ these models to anticipate and mitigate adversarial actions, such as sybil attacks or miner collusion. The robustness of a protocol’s game theory framework is a key factor in its long-term stability and resistance to manipulation.

A central abstract structure, horizontally oriented, comprises myriad faceted blue crystalline forms, transitioning from dark indigo to vibrant azure. This represents aggregated transaction data within sharding segments, forming an immutable distributed ledger technology core. Four smooth, white opaque spheres, embedded at each end, signify validator nodes or digital asset anchors. Transparent, intersecting rings encapsulate the entire assembly, illustrating interoperability protocols and cryptographic primitives that facilitate secure cross-chain communication and consensus mechanisms within a decentralized network architecture.

→Proposer Builder Separation

→Auction Efficiency

→Naive Strategy

Game-Theoretic Model Quantifies MEV-Boost Auction Inefficiency and Strategic Latency Dominance

A game-theoretic model formalizes MEV-Boost auctions, demonstrating how latency and strategic bidding, not maximal value, drive block selection, quantifying auction inefficiency.