💮 Whiteboard: An Overview of Credible Commitment Devices

“What is the major value proposition of crypto?”
“And why, from just first principles, this value proposition induces MEV?”

These are some of the questions discussed in this first installment of Flashbot’s new :white_flower: Whiteboard Series by Flashbots to explore and explain ideas around MEV, whose theme will be structured around answering: “how do we unlock the magic of trustless collaboration?”

format: 30min - 1hr episodes, one invited guest.

In this first episode, we share mental models on formulating crypto as permissionless credible commitment devices using (cooperative) game theory, then dive into the limits of the tradeoff space in mediating games and meta-games played using those devices.

Youtube: video
Host: Xinyuan Sun
Guest: Barnabé Monnot
Summary: A major value proposition of crypto that users can trustlessly collaborate by making credible commitments of their actions. In this episode, we discuss mental models to think about permissionless credible commitment devices through the lens game theory, with the (un)surprising observation that MEV arise as a necessity from the use of such devices.

Timestamps for Topics Covered

  • 0:00 Introduction to the topic and credible commitments
  • 12:40 Cost of coordination
  • 22:20 Modeling the prisoner’s dilemma with credible commitments
  • 32:08 Folk Theorem
  • 37:10 The payoff of coalition and collusion
  • 44:16 Modeling block space futures
  • 55:40 Value flow, MEV nomenclature, and Price of Anarchy
  • 59:20 Returning to credibility versus efficiency

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