Next Article in Journal
Risk and Return Management through Smart Contract Profit Redistribution
Previous Article in Journal
Evaluation of Harmful Factors of Municipal Solid Waste in Order to Be Valorized in Industrial Application
 
 
Order Article Reprints
Font Type:
Arial Georgia Verdana
Font Size:
Aa Aa Aa
Line Spacing:
Column Width:
Background:
Proceeding Paper

Incentives for Crypto-Collateralized Digital Assets †

Department of Computer Science at the University of Colorado, Colorado Springs, CO 80918, USA
Presented at the 3rd annual Decentralized Conference, Athens, Greece, 30 October--1 November 2019.
Proceedings 2019, 28(1), 2; https://doi.org/10.3390/proceedings2019028002
Published: 21 October 2019

Abstract

Digital currencies such as Bitcoin frequently suffer from high price volatility, limiting their utility as a means of purchasing power. Hence, a popular topic among cryptocurrency researchers is a digital currency design which inherits the decentralization of Bitcoin while somehow mitigating its violent price swings. One such system which attempts to establish a price-stable cryptocurrency is the BitShares market-pegged-asset protocol. In this paper, we present a simple mathematical model of the BitShares protocol, and analyze it theoretically and numerically for incentive effects. In particular, we investigate how the selection of two key design parameters function as incentive mechanisms to encourage token holders to commit their core BitShares tokens as collateral for the creation of new price-stabilized tokens. We show a pair of analytical results characterizing some simple facts regarding the interplay between these design parameters. Furthermore, we demonstrate numerically that in some settings, setting these design parameters is a complex, sensitive, and unintuitive task, prompting further work to more fully understand this design process.
Keywords: blockchain; cryptocurrency; decision theory; incentive design blockchain; cryptocurrency; decision theory; incentive design

Share and Cite

MDPI and ACS Style

Brown, P.N. Incentives for Crypto-Collateralized Digital Assets. Proceedings 2019, 28, 2. https://doi.org/10.3390/proceedings2019028002

AMA Style

Brown PN. Incentives for Crypto-Collateralized Digital Assets. Proceedings. 2019; 28(1):2. https://doi.org/10.3390/proceedings2019028002

Chicago/Turabian Style

Brown, Philip N. 2019. "Incentives for Crypto-Collateralized Digital Assets" Proceedings 28, no. 1: 2. https://doi.org/10.3390/proceedings2019028002

Article Metrics

Back to TopTop