Perfect Price Discovery and Blockchain

By

 Perfect price discovery is a major challenge in economics.




The Internet is skewed up. The advertisement business model has become a terrible incentive model for generating revenue for content. 

The advertisement industry relies on views of the website. 

Clickbait content whether it is a vulgar joke or rumours or attention-seeking fake news gets more revenue than quality ones. 

Imagine how much Einstein's paper would get revenue if the business model was through advertisements. Only a few people would have read and could understand it, so Einstein would have not earned more than a few dollars. 


There are alternative models like blockchain where a developer can decide what they want to incentivize. (e.g. Quality content or echo chambers that reinforce their existing views due to confirmation biases)


One night after thinking till 1 am, I got a simple equation.


Take for example you want to incentivize a quality essay. 

Bounty for writing an essay is 1 token: Price now for 1 token is $100 if prices rise to $200 (2 times), then bounty will become 1÷2 ×√2 = 0.7, if it rises 3 times $300, then bounty will become 1÷3×√3 = 0.57 and so on. You can set the beginning price of any good.


The formula is

Initial Token / Price increase times * √Price increase times


The benefits of this model are it incentivizes to pump the prices of tokens by investors/participants,  and if the prices rise, more people get benefited (without minting a lot of tokens that devalues the token) than a few due to its quadratic nature. 


That is when prices double (2 times) two people will get 0.7*200 rather than a single one with minting of 1.4 coins. So, about twice the number of people will get the advantage.





Simulation Code:

Comments

Post a Comment

Popular posts from this blog

If all content (subject matter) are alike, how can we expect innovation?

By
Image
Problems with alike content: 1) Homogenization of skills When a finished product reaches the market, the product development cycle goes through the touch of many divergent skilled peoples. A product can have many components which require different skill sets of different people. For example, Website Development: When you begin to develop a website, you start with designing a prototype of how it will look, which requires the expertise of graphic designers, you need the skill of programmer to code for the website, you need to be a webmaster to host your website. If you look into the depth, there is much more complexity to it. Each website has its own requirements. A prototype can be designed by using different software, such as Inkscape, illustrator and many others. Each software requires a different kind of learning and experience. Similarly, from programmer side, which language you will be using, which framework, based upon your website requirements such as speed of development, scalab
Read more

No blackboard teaching please during Covid-19 shut down

By
Image
Coronavirus has created a major challenge in our education system. Schools are closed for many months, and teachers are finding ways to teach students remotely. But many are hopelessly failing at it, some think that it doesn’t work as there is limited evidence in support of remote learning in case of kids while others are trying to make it work.  Remote learning requires a different set of tools and different ways of handling students, but the first principles of pedagogy remains the same.  Old habits die hard. Many teachers started blackboard teaching through lecturing remotely through the zoom app or other apps like skype.  What is blackboard teaching? Blackboard teaching is when communication is one-sided with little student engagement. The teacher lectures the content and students listen. But there are serious problems with it.  Here are some of the compilation about patterns of bad teaching: Patterns for bad practices of teaching Remember, a well-designed video is many times super
Read more

The Competitive Collaboration Algorithm

By
Image
Competitive Collaboration Algorithm: It's a decentralized network where you compete to collaborate. Edge weight represents difficulty to get connected. Difficulty depends on factors such as distance, location, quality, price. We need to choose subgraph containing all the required nodes (e.g. nodes containing a,b,c,d ) that has a minimum weight or optimal weight. a,b,c,d can represent different services, whereas a1, a2 represents the same services from a different service provider. For example, 'a' can represent a student, 'b' can represent a teacher, 'c' can represent content provider such as a biology textbook and 'd' can represent a classroom or building. Similarly  'b1' represents teacher1, 'b2' represents teacher2, etc. So, For student1 (a1), the optimum subgraph or subgraph with minimum weight containing all the required services are a1,b1,c2, d2 with weight 0.5+2.3+4.2 . Usefulness of the model: 1) Prediction: One can make a pr
Read more