• Wulf A. Kaal

CRYPTO ECONOMICS - The Top 100 Token Models Compared


Contemporary society is expeditiously embracing decentralized solutions for human interaction. Increasingly complex frameworks, theories and models are needed to understand the issues facing contemporary societies. Crypto-economics as a discipline is an attempt to create models that allow the analysis of interrelationship in increasingly complex frameworks of human interaction in distributed systems. Most commonly accepted public blockchains are a product of crypto-economics.

The term “Crypto-Economics” has been defined in several different ways. Most commonalities in definitions for the term crypto-economics include the use of cryptography and incentive design to created networks, applications, and systems. Further, crypto-economics is interdisciplinary. Economics examines how individuals and groups respond to incentives. Connecting it to traditional economics, crypto-economics is mostly associated with mechanism design, a sub-discipline of economic theory and mathematics.

Yet, crypto-economics is more applied cryptography than economics. Considering money as an engineering problem as well as considering technology from the perspective of economic incentive design and security, problems in economic terms are unique elements of this discipline and may feel counterintuitive for economists and engineers alike.

Crypto-Economics is subject to limitations. The crypto-economic system design’s strength and endurance depends in large part on its assumptions about human reactions to economic incentive designs. Shaping future human behavior through incentive design is limitedly successful because the social engineer speculates about human future mental states and corresponding belief systems. Future human reactions may in fact be entirely different than anticipated by the social engineer and incentive designer.

Token models and their design and incentive optimization within their design are at the core of economic designs in distributed systems. This article evaluates these well-established token models. Because the economic experimentation inherent in crypto-economics continuously generates new token models and incentive designs for tokens, the token model examination herein is naturally incomplete.

The full article can be downloaded here:

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3249860

Wulf A. Kaal, University of St. Thomas School of Law


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