A sequential game is a type of game theory model where players make decisions in a specific order, and later players have some knowledge of the choices made by earlier players. In digital asset protocols, this applies to scenarios like block production, transaction ordering, or governance proposals where participants act based on prior network states or other participants’ actions. Understanding these dynamics is crucial for analyzing strategic interactions and predicting outcomes in decentralized systems. It helps reveal optimal strategies for network participants.
Context
The analysis of sequential games is central to understanding the economic security and incentive structures of blockchain protocols. Debates often focus on how to design mechanisms that deter malicious behavior and encourage cooperation among participants who act sequentially. Future developments involve applying advanced game theory models to optimize protocol design, ensuring long-term network stability and fairness in decentralized environments.
A new batch-processing AMM mechanism uses a constant potential function to ensure arbitrage resilience and strategy-proofness, fundamentally mitigating MEV.
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