Content:

• Foundations of Cryptoeconomic Systems

Abstract

• Cryptoeconomic systems like blockchain networks are complex systems. They are institutional infrastructure upon which socioeconomic collaboration is facilitated in the absence of intermediaries or traditional organizations. Purpose driven tokens can be used to incentivize individual actions towards a collective goal.
• Designing them requires a complex systems approach, interdisciplinary research, and economic systems engineering. This paper provides a conceptual framework synthesizing the research space. It ends by outlining specific research questions and methodologies for future research in this field

Introduction

• Cryptoeconomics is an emerging field of economic coordination games in cryptographically secured peer-to-peer networks. The term is under-defined because it is often used in so many different contexts. This leads to communication breakdowns and challenges when trying to come up with a rigorous definition.
• The microeconomic study of cryptoeconomic networks is the most commonly used perspective. One weakness of this perspective is the tendency to view the technology as neutral and to downplay the creators’ responsibility for outcomes. In contrast, systems engineering literature places a large responsibility on engineers that are responsible for the design and maintenance of critical infrastructure.
• The term “cryptoeconomics” is context dependent.
• We can develop complementary micro, meso, and macro definitions of the term.
• These definitions are the synthesis of examinations of cryptoeconomic systems in terms of: complexity, interdisciplinary research, institutional economics, coordination , emergence , network structure , and tokenization .

A Complex Systems Perspective

• Complex systems theory investigates the relationships between a system’s parts, its behaviors, and its environment. Complex systems research draws contributions from various scientific domains such as mathematics, biology, and physics. lt uses analysis to reduce systems to better understand the individual parts It uses synthesis to understand the whole system as greater than the sum of its parts
• Cryptoeconomic systems like Bitcoin can be described as a special class of complex socioeconomic systems. Designing and developing resilient cryptoeconomic protocols requires a strong interdisciplinary approach.

An Interdisciplinary Perspective

• Interdisciplinary research is appropriate when the research subject involves complex systems, and the research question is not confined to a single discipline.

• A wide range of disciplines are relevant to cryptoeconomic systems engineering. They are bound by a central concept—allocation of resources.

  

• Cryptoeconomic networks provide coordination and scaling for resource allocation decisions of stakeholders with unique preferences, information, and capabilities. These resources can be:

  • Physical (hardware and electricity)
  • Financial (tokens or fiat money)
  • Social (governance participation, code contributions, evangelism)

• Disciplinary bias and disciplinary jargon make the interdisciplinary research process difficult. We need a common language to facilitate cross disciplinary communication.