How the Olympus fork project reached the optimal solution in the prisoner’s dilemma


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Decentralized governance and the establishment of external punishment mechanisms or methods for the Olympus fork project to achieve balance in the game between all parties.

Original title: “(3,3) Formula for Success: Returning to the Basics and Deeply Plowing the Prisoner’s Dilemma”
Author: Raccoon Chan Little Raccoon

Recently, various Olympus forks have become popular. Some have created many myths of rich wealth, and some have created myths of rich wealth for many project parties. Whether it is CT, Weibo, Discord, Telegram, they are full of (3,3) names. Postpone, but besides meme, how many people understand the essence of (3,3)?

(3,3) is one of the classic examples from game theory—the optimal solution in the income statement of the prisoner’s dilemma. It does not simply mean “you don’t sell, I don’t sell, and the price of currency will spiral upward” or “late entry” As long as the people who hold the game long enough, the advantage will not be less than the people who enter the market early.”

In the prisoner’s dilemma, it is assumed that two prisoners of the same gang are separately arrested and interrogated at the police station. They have two options, one is to refuse to plead guilty (cooperation), and the other is to recruit from the truth (betrayal). If both people refuse to plead guilty and the police station has insufficient evidence, they can only be detained for one month (3,3). If one of them pleads guilty, he can become a tainted witness and be released in court, while the other who does not plead guilty will have to Sit in jail for ten years (4, 1). If both plead guilty, it would not mean to taint the witness, because the evidence is very conclusive, and both have to sit in jail for eight years (2, 2). Of course, the specific figures often change depending on the situation, and changing the profit and loss figures will also have a considerable impact on the results (raccoons have participated in many similar experiments), but that is probably the case. Taking the above income statement as an example, the best solution for two prisoners is undoubtedly two refusing to plead guilty, which can minimize the total sentence of the two prisoners. However, if the other party chooses to cooperate, he has to sit for a month when he cooperates, and the betrayal can be released in court, and the self-interested individual will choose to betray. When the other party chooses to betray, he is still cooperating and keeps silent, and he must sit in prison for ten years. If the betrayal confession can be saved for two years, the self-interested individual will choose to betray. The result is that the two who confessed separately often choose to betray without knowing the other’s strategy, and the overall profit and loss will be (2, 2), and the total income for the two is the worst in the four cases.

In game theory, the first assumption is that everyone is absolutely self-interested, so just believing that human nature is Diamond Hands’s Prisoner’s Dilemma, there is no way to reach the Nash equilibrium (meaning the equilibrium under the assumption of absolute self-interest) As a result), it is necessary to use a unique mechanism to restrain individual behaviors, to change the income statement originally belonging to the prisoner’s dilemma into the income statement of other game theory examples, or to add external factors in order to achieve a sustainable optimal solution. Both choose to cooperate and reach (3,3).

In many economic experiments, different methods and combinations have been tried, and several factors are considered to be the most effective for achieving (3,3).

1. Provide a way for two people to communicate (strategy to achieve cooperation)

If they can communicate, they can use various OTC py transactions. For example, if you cooperate, you can go out and divide the spoils, or talk about what handle the other party is holding, whether there is evidence of stealing the pencils of neighboring students when they were young, etc., to prompt the two of them cooperate.

2. Let them see everyone (emotional cooperation)

Even if they were not allowed to see each other’s countermeasures or communicate secretly, simply replacing the brick wall between the two cells with glass (the experiment was to put them in the same soundproof room instead of two rooms). Because they can’t bear to betray the other party they see with their own eyes (compared to the two sides who are taboo behind the brick wall), they keep one hand and choose to cooperate with a greater probability.

3. Intervention of external forces (fear to achieve cooperation)

That is, if two prisoners belonging to the same gang learn that their gang boss treats the betrayers in the family law (change the income statement), even if they are acquitted, they will be tortured. They will still be based on the principle of self-interest, but choose to cooperate.

4. The same opponent repeats multiple matches (testing to achieve cooperation)

In the initial game of acceptance, based on the fact that everyone does not know each other, people who are absolutely selfish will likely choose to betray. In repeated matches, if both parties understand the nature of the match and the characteristics of their opponents, they will choose to cooperate sporadically. If the opponent responds cooperatively, long-term cooperation can be gradually achieved.

It should be noted that not all profit and loss statements of game theory are prisoners’ dilemma models. Some (such as contracts) may be zero-sum games, and some are other types of profit and loss models. Game theory is not limited to prisoners’ dilemma, but he is best known. Raccoon believes that the value-creating Olympus fork is indeed similar to the Prisoner’s Dilemma.

Practice (refer to how the prisoner’s dilemma result is achieved (3,3))

Strictly adopt decentralized governance (strategy to achieve cooperation)

The operation of ordinary investors on the chain is very different from the prisoner’s dilemma. It is inherently transparent, but I think the project party is not the police officer in the prisoner’s dilemma, but one of the prisoners at the same time. Therefore, in order to prevent them from choosing to betray, they need to use DAO’s Actively participate in actual decision-making, warehouse multi-signature management, contract open source and other methods to allow everyone to discuss strategies so as to avoid any betrayal by any party (project party/Dev/Partners/Strategic Investors/VC/Retails). This sense of participation can also enhance the community Consensus, improve the benefit of (3,3) in the income statement (can create a product like Olympus Pro, it may become (4,4)).

Hold a lot of community activities (emotional cooperation)

Unlike ordinary DeFi protocols, Olympus fork has high cohesion for the community. The community cohesion referred to here does not refer to the kind of “drawing is justice,” but community activities that have nothing to do with interests. For example, autonomous, community teaching film production without Incentives, native meme that is not a meme competition, community meetings of specific ethnic groups (Designers weekly meeting, Developers weekly meeting, NFT collectors weekly meeting…), etc. Such activities can emotionally kidnap participants. Let them see each other and leave a bit of affection when dumping (it’s a bit like the NFT community, but it’s quite the opposite mode of thinking from other games).

Establish an external punishment mechanism (fear to achieve cooperation)

The extremely high gas fee of Ethereum itself is already a very effective punishment mechanism. Many (3,3) people see that the price of the currency has risen. Unstake is because the gas fee is too high. In addition, some (3,3) forks may be too early Unstake people levy punitive taxes, but because the Olympus mode and the prisoner’s dilemma are not always the same, the Olympus mode is a selective participation, and the prisoner’s dilemma is that you have been arrested and forced to participate. , So the punishment mechanism is a double-edged sword. For the time being, raccoon has not seen OlympusDAO or any Olympus fork has a moderately effective punishment mechanism.

The early-stage project party or the giant whale guarding the disc, and slowing down the Ponzinomics process (testing to reach cooperation)

Under the understanding of the prisoner’s dilemma, the two parties who do not understand each other often choose to betray in the initial cooperation, which means that there will be a lot of selling pressure in the early stage of the rational market (because many people in the new market are strangers, that’s why comes from Olympus OG Imitation disks are often particularly popular because they will open better), so it is difficult to accumulate the original community. Based on the fact that OlympusDAO and various forks are essentially repetitive prisoners’ dilemmas, it can be expected that the longer the plate lives, a greater proportion of people will choose rational cooperation in the face of interest temptation. Therefore, in order to avoid the initial collapse of confidence, if the project team or some of the giant whales can use some means to protect the disc (it can be real money or storytelling), this repetitive prisoner’s dilemma can be brought to an end. In the later period of the positive cycle, the inflation rate must also be well controlled. Don’t provide too high interest in the early stage to survive the later period of the positive cycle. In short, living a long time in the Olympus model is more important than earning more.

The final conclusion is that betrayal is the norm in this income statement without the influence of external forces, so Profit is profit, unless the mechanism has been proven effective for a long time, otherwise the appropriate amount of profit will be withdrawn. In addition, if it is a simple fork, it will not survive without the above improvement mechanisms. Also, if the project team continues to talk, they find that they have a heavy zero-sum mentality (the same is true for contract players and professional gamblers) and leave the market early. It is feasible for them to do other types of DeFi protocols, but the Olympus fork is deadly. of.

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