Today I am writing briefly about Game Theory and how the communities ability to trust and cooperate can benefit us all in the longterm.

Game Theory

This is both a complicated and simple subject. You can google the term and find countless definitions. The most famous explanation being the prisoners dilema.

If you have prisoners A and prisoner B charged with committing a crime together. They can choose shared sacrifice to lighten the punishment for both, or one can sacrifice and the other not sacrifice, so the non-sacrificing prisoner has short term benefit, but long term suffering. While the sacrificing prisoner has short term suffering and long term benefit. In the event that both sacrificed, they both would have short term sufferring, but less suffering then when only one sacrificed, and they both would enjoy long term benefits.

Game theory teaches us that most prisoners chose the short term gain, resulting in longterm sufferring. The exception to Game Theory is a Community.

Community

While humans can exist simply as mated pairs, which can address their basic needs of food, shelter, safety and security. The natural environment of the earth is harsh and many dangers exist.

Life for simple mated pairs of humans is harsh and sometimes shorter compared to groups of humans working together. Humans in larger groups sacrifice some freedoms and benefits of the smaller mated pair in exchange for the more efficient procurement of food, shelter, safety and security of larger groups, which are also known as Communities.

Joining a group or community involves some sacrifices short term, in exchange for longterm benefits. Joining a community also teaches humans to develop trust and cooperation. You learn to trust others observing their behavior and they learn to trust you observing your behavior.

Applied to Cubfinance

In reference to the decentralized project created by the Leofinance development team Cubfinance, the price or value of the project token is low. So there is a short term benefit to earning the token and selling it right away. But this short term benefit creates constant sell pressure on the token, and keeps the price low. While there are staking opportunities for this token, which pay very good interest rates, and investor use of these reduces selling pressure or downward pressure on the token price. It also providing a longterm benefit of higher interest rates paid on the token and higher price when sold.

I think that investors in Cubfinence find themselves in sort of a prisoners dilema. Because they can sell the token immediately for a short term gain, and to the detriment of the other investors. Or they could sacrifice short term gains and earn long terms benefits by staking the token in longterm vaults paying higher interests rates or reinvest the token in the liquidity pools to increase their Cub earnings. Those two strategy involves short term sacrifice, but potentially longterm benefits.

So the Cubfinance investor has a choice of short term benefit to him or her self, or short term sacrifice and potential long term benefit to themselves and other investors.

This is why I see this situation as an application of the Game Theory, and it is the challenge investors in Cubfinance face. I am encouraged by the growth of both the amount of Cub token deposited in the longterm vaults, and the increase in total value locked in the liquidity pools suggests that investors are choosing short term sacrifice over short term gain. This sort of cooperation and trust demonstrates a true community.

@shortsegments

Posted Using LeoFinance ^Beta

Posted Using LeoFinance ^Beta