A mean field game model of staking system

Jinyan Guo (), Qevan Guo (), Chenchen Mou () and Jingguo Zhang ()
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Jinyan Guo: National University of Singapore
Qevan Guo: IoTeX
Chenchen Mou: City University of Hong Kong
Jingguo Zhang: National University of Singapore

Digital Finance, 2024, vol. 6, issue 3, No 4, 462 pages

Abstract: Abstract In this paper, we present a Mean Field Game (MFG) approach to model the staking system in the crypto industry and propose a reinforcement learning framework for parameter optimization. Under log utility, we derive the optimal staking strategy for miners. Then we develop the dynamics of the staking reward rate and staking ratio using the MFG fixed point condition. Based on our MFG model, we propose a reinforcement learning framework to optimally decide the inflation rate of the staking system, aiming to increase the staking ratio or market cap of the blockchain project. We provide a few numerical experiments incorporating real statistical data from IoTeX to validate our approach. Our proposed model and framework offer a brand new robust method for parameter optimization in the staking system, contributing to the fields of tokenomics design in the crypto industry.

Keywords: Game theory; Mean field game; Cryptocurrency; Staking system; Tokenomics; Reinforcement learning (search for similar items in EconPapers)
JEL-codes: C4 C6 C7 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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DOI: 10.1007/s42521-024-00113-4

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