Welfare analysis, in the context of blockchain and cryptocurrency, examines the overall well-being and utility derived from a system or protocol by its participants. This evaluation considers factors such as economic efficiency, fairness of distribution, user satisfaction, and the achievement of stated objectives. It seeks to gauge the net positive or negative impact of a system on its stakeholders, moving beyond purely technical performance metrics to assess broader societal or economic outcomes. Such analysis is crucial for understanding the long-term sustainability and adoption potential of decentralized technologies.
Context
Welfare analysis is gaining traction as a framework for evaluating the impact of new blockchain protocols and decentralized applications. News coverage may feature studies or reports that assess the economic benefits or drawbacks of certain consensus mechanisms, the distributional effects of tokenomics, or the overall utility provided by DeFi platforms. The discourse often involves comparing different systems based on their ability to generate positive welfare outcomes for a diverse set of users and stakeholders.
This research formalizes MEV extraction as a multi-stage game, revealing systemic welfare losses and proposing cryptographic mechanisms to restore market fairness.
This research formally models MEV as a multi-stage game, revealing competitive dynamics that degrade welfare and quantifies mitigation through commit-reveal schemes.
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