Bruno Mazorra — Is Folk's theorem the Blockchain's nightmare? (ETHconomics @ Devconnect 2022)
Channel: ETHconomics Devconnect
Date: 2022-05-20

In blockchain research papers, is commonly accepted that a DeFi protocol is "economically secure" if the predefined protocol is strong incentive compatible. That is, if rational players will always follow the predefined protocol. However, in general, games are played indefinitely. By Folk's theorem, cooperative strategies are a Nash equilibrium in repeated games, leading to inefficiency, instability and economic insecurity. In the talk, we will introduce new terms and concepts that could allow developers and researchers to re-think about mechanism design.