Fundamentals of automated market makers
What if there were an alternative means of asset allocation that smoothly and automatically adjusted pricing in response to demand? That’s the promise of automated market makers. Read on to find out what AMMs are and how they offer a new way forward for providing liquidity.
EPNs – Part 5: EPNs as game networks
Games are difficult to launch and harder to sustain, and especially in today’s competitive games industry. Players have hundreds of thousands of game options and more come to market every day; as such, positive network effects are essential for a game’s success. The challenges faced by games are fairly straightforward: Network effects help games to […]
EPNs – Part 4: The PRESTO framework
The benefits of Economic Protocol Networks are obvious, but the best means to obtain and sustain those benefits often are not. That’s why we recommend the use of the qualitative PRESTO framework, first outlined by Stefanos Leonardos, Daniël Reijsbergen and Georgios Piliouras of Singapore University. PRESTO is an acronym that describes a five-axis design space […]
EPNs – Part 3: Example of EPN and network effects
To understand how EPNs operate, it makes sense to take a look at a real-world example of blockchain protocol and token network effects in action. Compound is a decentralized finance application, built on top of Ethereum, that offers users an algorithmic savings and loan experience for ETH or other currencies based on the Ethereum Network, […]
EPNs – Part 2: EPN and network effects
The common threads that unite successful protocols is that they have limited restrictions on participating, are open and interoperable and are impartial to who uses them. Once protocols are successful, they generate network effects that sustain them and encourage their growth. Participants in blockchain networks also essentially have to make an investment, however small, in […]
EPNs – Part 1: Introduction to Economic Protocol Networks
Traditional networks are based on physical connections. Because of this, their growth is limited by resource requirements associated with expanding physical infrastructure. Protocol networks are software-based, which means that their growth is essentially constrained only by negative network effects, much of which are rooted in developer attempts to extract value from the network. As we’ve […]
Networks – Part 3: Operator networks vs. open networks
When we talk about networks, it’s important to underscore that not all networks are alike. For instance, AT&T, AOL, Facebook, League of Legends, Uber, and Roblox are all “operator” networks, or closed networks, as is the case for most commercially developed networks. In a truly open network, there are no direct incentives for the network […]
Networks – Part 2: Network effects
Networks suffer from what’s often called the cold-start problem. They aren’t very valuable early on when there aren’t many participants; who wants to go to a party that consists of a few people hanging around a punchbowl and staring at their phones? The challenge is to get to a network to a critical level of […]
Networks – Part 1: History of networks
In its simplest definition, a network is a collection of participants who are using a given system and the connections between them. They choose to use the network because it gives them benefits, and the collective sum of all these benefits to everyone on the network are what we refer to as “network value.” It […]