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