An incentive-compatible ‘deposit-refund’ mechanism for enabling trade without trusted third parties is the ‘exploding Nash equilibrium’ where both parties put up 100% of the value in an ‘exploding box’, and if either is unhappy, the value is destroyed. Neither party gains from scamming the other. This can be implemented as ‘2-of-2’ escrow in Bitcoin & was popularized by the NashX website, and proposed for darknet market use.
2016-05-18–2021-08-01 in progress certainty: log importance: 3
- “DSCP: Validation of Decentralised Smart Contracts Through Game Theory and Formal Methods”, Bigi et al 2015
- “Blockchain–Based Solution for Proof of Delivery of Physical Assets”, Hasan & Salah 2018
P2POX, Anonymous 2015
“KopperCoin—A Distributed File Storage with Financial Incentives”, Kopp et al 2016
“Solving the Buyer and Seller’s Dilemma: A Dual-Deposit Escrow Smart Contract for Provably Cheat-Proof Delivery and Payment for a Digital Good without a Trusted Mediator”, Asgaonkar & Krishnamachari 2018 (see also “Incentive-Compatible Escrow Mechanisms”, Witkowski et al 2011; “Optimal Smart Contracts with Costly Verification”, Mamageishvili & Schlegel 2020)