{"ID":2827556,"CreatedAt":"2026-06-01T04:54:23.091178241Z","UpdatedAt":"2026-06-01T04:54:23.091178241Z","DeletedAt":null,"paper_url":"https://arxiv.org/abs/2512.16514","arxiv_id":"2512.16514","title":"Algorithmic Monetary Policies for Blockchain Participation Games","abstract":"A central challenge in blockchain tokenomics is aligning short-term performance incentives with long-term decentralization goals. We propose a framework for algorithmic monetary policies that navigates this tradeoff in repeated participation games. Agents, characterized by type (capability) and stake, choose to participate or abstain at each round; the policy (probabilistically) selects high-type agents for task execution (maximizing throughput) while distributing rewards to sustain decentralization. We analyze equilibria under two agent behaviors: myopic (short-term utility maximization) and foresighted (multi-round planning). For myopic agents, performance-centric policies risk centralization, but foresight enables stable decentralization with some volatility to the token value. We further discuss virtual stake--a hybrid of type and stake--as an alternative approach. We show that the initial virtual stake distribution critically impacts long-term outcomes, suggesting that policies must indirectly manage decentralization.","short_abstract":"A central challenge in blockchain tokenomics is aligning short-term performance incentives with long-term decentralization goals. We propose a framework for algorithmic monetary policies that navigates this tradeoff in repeated participation games. Agents, characterized by type (capability) and stake, choose to partici...","url_abs":"https://arxiv.org/abs/2512.16514","url_pdf":"https://arxiv.org/pdf/2512.16514v1","authors":"[\"Diodato Ferraioli\",\"Paolo Penna\",\"Manvir Schneider\",\"Carmine Ventre\"]","published":"2025-12-18T13:28:00Z","proceeding":"cs.GT","tasks":"[\"cs.GT\"]","methods":"[]","has_code":false}