From Curved Bonding to Configuration Spaces

Michael Zargham (), Jamsheed Shorish and Krzysztof Paruch ()

Working Paper Series/Institute for Cryptoeconomics/Interdisciplinary Research from WU Vienna University of Economics and Business

Abstract: Bonding curves are continuous liquidity mechanisms which are used in market design for cryptographically-supported token economies. Tokens are atomic units of state information which are cryptographically verifiable in peer-to-peer networks. Bonding curves are an example of an enforceable mechanism through which participating agents influence this state. By designing such mechanisms, an engineer may establish the topological structure of a token economy without presupposing the utilities or associated actions of the agents within that economy. This is accomplished by introducing configuration spaces, which are proper subsets of the global state space representing all achievable states under the designed mechanisms. Any global properties true for all points in the configuration space are true for all possible sequences of actions on the part of agents. This paper generalizes the notion of a bonding curve to formalize the relationship between cryptographically enforced mechanisms and their associated configuration spaces, using invariant properties of conservation functions. We then proceed to apply this framework to analyze the augmented bonding curve design, which is currently under development by a project in the non-profit funding sector.

Keywords: Economics; Blockchain; Dynamic Games (search for similar items in EconPapers)
Date: 2019-12-19
New Economics Papers: this item is included in nep-des
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Working Paper: From Curved Bonding to Configuration Spaces (2019)
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