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A mean field game model of staking system

Author

Listed:
  • Jinyan Guo

    (National University of Singapore)

  • Qevan Guo

    (IoTeX)

  • Chenchen Mou

    (City University of Hong Kong)

  • Jingguo Zhang

    (National University of Singapore)

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.

Suggested Citation

  • Jinyan Guo & Qevan Guo & Chenchen Mou & Jingguo Zhang, 2024. "A mean field game model of staking system," Digital Finance, Springer, vol. 6(3), pages 441-462, September.
    • Handle: RePEc:spr:digfin:v:6:y:2024:i:3:d:10.1007_s42521-024-00113-4
    DOI: 10.1007/s42521-024-00113-4
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    More about this item

    Keywords

    Game theory; Mean field game; Cryptocurrency; Staking system; Tokenomics; Reinforcement learning;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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