Syncus: Mastering Game Theory in DeFi – Beyond the Prisoner's Dilemma
Last updated
Last updated
The prisoner's dilemma, a well-known concept in game theory, illustrates how individual rational choices can lead to suboptimal outcomes for a group. OlympusDAO’s implementation, particularly the (3,3) strategy, had significant flaws, including the assumption that staking necessitated bonding. This article explores these flaws and how Syncus optimizes its strategy using game theory.
OlympusDAO: The Misguided (3,3) Strategy
OlympusDAO used the prisoner's dilemma matrix to illustrate beneficial actions for participants, introducing the (3,3) meme. This strategy, however, had critical issues. It assumed that staking required bonding, an assumption that did not reflect reality. Bonding – crucial for the protocol’s growth – was often bypassed in favor of market buying, leading to a disconnect between intended and actual participant behavior.
Syncus: The DAO Always Wins
In Syncus, actions that might seem detrimental are structured to benefit the DAO. This creates a win-lose situation where the DAO invariably benefits. Long-term stakers of SYNC, who can take loans against their holdings (to solve the "HODL" contradiction, where you gain infinitely but are never allowed to realize this gain), are positioned to gain from short-term speculators. This dynamic transforms Syncus into a kind of decentralized casino, where the house – in this case, the DAO and its long-term participants – always wins.
Long-term, SYNC is a bet on a new paradigm, the collapse of the traditional banking system as the masses wake up to the truth. Short-term it's a bet on humans gambling on this fact.
Two-Player Model and SYNC's Resilience
In a two-player scenario within Syncus, any sale of SYNC results in a loss for the seller but benefits stakers, a dynamic that ensures constant value flow to the DAO. This model is fundamentally different from typical crypto Ponzi schemes or meme-coins. Even if SYNC's activity diminishes, the remaining APY distribution reignites interest, fostering a cycle of revival. This makes selling SYNC beneficial for the ecosystem – a redistribution mechanism.
A better chart would for Syncus would be one describing the actions a player takes and the results for that player and the DAO.
TBA
The fact that selling SYNC fuels the ecosystem through a tax means that a user is missing out on growth they're creating, in addition selling SYNC becomes especially -ev considering that the user also pays that tax. It never makes sense for a person to sell SYNC.
The SYNC Trading Phenomenon
An unexpected phenomenon in the trading pattern of SYNC emerged, observable as a cycle of pump, dump, and subsequent pump, with an overall upward trajectory. Unlike typical cryptocurrencies, where trading often results in a zero-sum game, Syncus profits from every transaction. With a 15% cut from the cumulative trading pot, the DAO benefits even if the token price remains static. This profit distribution attracts more attention, buyers, and sellers, fueling a self-sustaining cycle.
Why this happens:
You can imagine if 100 participants all bought and sold SYNC, in a regular protocol this would have lead to a 0-sum game since all the money going into the hat is taken out again, albeit in different ratios. This is how a meme-coin and most other cryptocurrencies who do not provide a service or produce value work. They are a pot you stick your money into a fight it out for, we call these PVP tokens. In Syncus the DAO earns 15% of the cumulative pot coming in. If everyone buys and sells, the DAO profits even if the price is at the same level it started at. This profit is distributed to holders, thus bringing in more attention and more buyers/sellers, leading to the flywheel described in the original page. In the chart we can see this materialized as a massive pump, a dump and a new floor created from the tax, as less SYNC is left in the liquidity pool, setting up for yet another pump to take off, this pattern will continue as SYNC grinds it's way up with it's treasury.
The is the biggest difference between any crypto ponzi (or meme-coin) and Syncus: Syncus has no death spiral. If Syncus dies down there is still APY to be distributed, bringing in more volume (or revenue from the ecosystem), bringing in more APY. A reigniting protocol. As soon as SYNC dies, it makes sense to buy and stake sync and thus it starts again. Syncus will continue to use protocol profits to garner attention in this attention economy. In this sense selling is good for SYNC, SYNC needs sells to maintain itself -bullish redistribution. You might see the price of SYNC go +100% one day and -50% the other day starting off at the same price. This is from previous holders taking profit, while the new holders are now in. Instead of paying attention to the price pay attention to the distribution of SYNC. The biggest danger for $SYNC is price increasing too rapidly without dumps in between, as this leads dumpers to dump at a higher price extracting more from the protocol-owned liquidity. Optimally we serve many small holders who profit 50% at the time, to create the maximum amount of value for all SYNC holders.
