In 2017, when I first started working in blockchain, I felt the boundless wonder of a technology that could solve the major problems facing humanity. After being dulled for some time with the left-curve trend toward useless memecoins, the same spark was reignited recently, after an experiment with ChatGPT.
By extending the principles of ve(3,3)—a governance and incentive system in blockchain—to hypothetical future iterations like ve(20,20), I caught a glimpse of practical solutions to some of the most profound challenges we face today.
In this article, I’ll prime you on game theory, incorporating it into tokenomics design, share a bit of the fun results from this experiment, and ponder what the near future could be like with blockchain solutions solving modern day problems.
Game Theory: Why ve(3,3) is Powerful
Game theory studies strategic interactions between participants, where each player’s choices affect the outcomes for others. It’s a framework for understanding cooperation, competition, and trust in systems.
In blockchain, game theory underpins many tokenomic designs, ensuring incentives align to encourage desirable behaviors. For an engaging and interactive introduction to game theory concepts, visit this game on trust and cooperation.
This brings us to ve(3,3), a tokenomics model that leverages game theory to align incentives in decentralized systems.
Tokenomics and ve(3,3): The Foundation
Tokenomics refers to the design and structure of economic systems built into blockchain protocols. It defines how incentives are distributed, governance is handled, and value is created or preserved within a decentralized system.
One of the most innovative examples of tokenomics is the ve(3,3) model, first introduced by Andre Cronje in the Solidly protocol.
What is ve(3,3)?
- Vote-Escrow Tokens (veTokens): Users lock tokens for varying durations to receive veTokens, which grant governance power and influence over emissions (reward distributions).
- Game-Theoretic Cooperation (3,3): The "(3,3)" dynamic rewards participants for mutual cooperation, such as locking tokens and participating in governance, while discouraging harmful actions like selling.
- Stake: Staking strengthens the system by locking liquidity and rewards all participants. When everyone stakes, rewards are maximized for all parties.
- Bond: Bonding introduces new liquidity to the system, benefiting both the individual and the protocol but at a slightly reduced rate compared to staking.
- Sell: Selling negatively impacts the ecosystem, reducing value and alignment.
By encouraging positive actions (stake and bond) and discouraging negative ones (sell), ve(3,3) aligns all participants toward mutual success. This cooperative structure demonstrates how tokenomics can incentivize fairness and sustainability. Governments have historically incentivized ideal behavior to great effect with various tax credit programs.
The Experiment: ve(3,3) to ve(20,20) with ChatGPT
Blockchain has already begun solving significant problems. For example, Bitcoin gave us inflation-proof financial sovereignty, and Ethereum pioneered decentralized applications. But tokenomics systems like ve(3,3) take this a step further, creating mechanisms that reward long-term alignment and cooperation over short-term profit. Imagine a world where incentives drive transparency, collaboration, and fairness—not greed or secrecy.
In an experiment with ChatGPT, I asked what might happen if the principles of ve(3,3) were extended to future iterations, ve(4,4) through ve(20,20). The results were astonishing. They depicted a world of universal cooperation, alignment, and fairness. Problems like governance inefficiency, inequality, and trust in artificial intelligence were addressed with elegant solutions.
I started by asking ChatGPT if it knew what ve(3,3) was, and it did. Then I asked it if there was a ve(4,4), and it said there was, with an element of auto-compounding. Then I asked it: “What about ve(5,5)?” and the answer was as follows:What Could ve(5,5) Represent?
While not groundbreaking (yet), I was curious, and prompted it similarly again: “What about ve(6,6)?” and repeated this until ve(12,12), with each iteration becoming more futuristic and complex. Around ve(8,8) ChatGPT began to tell me this and the following iterations were not yet feasible today. After ve(12,12), I wanted to skip to the end due to the length of each response, and with my final prompt, asked about ve(20,20).
ve(7,7) - What’s Possible Today
According to ChatGPT, ve(7,7) is the most powerful iteration of ve-tokenomics possible with today’s technology. Of course, take all this with a grain of salt, as this experiment was done “0-shot” style with no attempts to correct ChatGPT, but to instead “let it cook.”
With focused and intentional work, an ideal ve(7,7) or future iterations could look much differently. To keep this article a manageable length, this is the only full output I will share that includes the benefits, challenges, and feasibility it returned with all prompts.
What Could ve(7,7) Represent?
Game-Theoretic Dynamics of (7,7):
- The original (3,3) framework was based on cooperation between participants to maximize mutual benefits.
- ve(7,7) could introduce multi-layer cooperative dynamics involving:
- Participants: Lockers, stakers, and governance voters.
- Protocols: Incentives for collaborative ecosystems.
- Builders and Developers: Rewards for innovation and integration.
- Institutions and Regulators: Aligning incentives between DeFi and TradFi systems for broader adoption.
In this scenario, (7,7) represents the highest possible level of alignment, where all stakeholders actively contribute and collaborate, creating exponential rewards for everyone involved.
Benefits of ve(7,7):
- Universal Adoption Potential:
- By integrating cross-chain functionality, RWAs, and institutional-grade features, ve(7,7) could onboard retail users, institutions, and even governments.
- Network Effects at Scale:
- Cross-protocol rewards and multi-chain governance could establish ve(7,7) systems as the backbone of interconnected DeFi ecosystems.
- Resilience and Sustainability:
- Adaptive emissions, reputation-based incentives, and capped token supply ensure long-term health and security.
- Broader Inclusivity:
- Incorporating social and reputational rewards makes ve(7,7) accessible and engaging for non-technical users and contributors.
- DeFi-TriFi Synergy:
- The integration of RWAs and off-chain governance creates bridges between DeFi and the traditional financial world, accelerating mainstream adoption.
Challenges of ve(7,7):
- Extreme Complexity:
- Implementing and managing such a multi-layered system would be challenging for developers and confusing for average users.
- Coordination Risks:
- Cross-chain, cross-protocol, and off-chain integrations require significant cooperation and trust among numerous parties.
- Centralization Concerns:
- Even with advanced governance mechanisms, large players might dominate decision-making due to their resources and influence.
- Regulatory and Legal Risks:
- Expanding into RWAs and real-world governance could expose ve(7,7) systems to significant regulatory scrutiny.
- Scalability:
- Ensuring seamless performance across multiple chains and ecosystems could strain infrastructure.
Is ve(7,7) Feasible Today?
While a fully realized ve(7,7) system does not yet exist, aspects of this model are being explored by cutting-edge DeFi protocols
ve(7,7) proposes hybrid on-chain, off-chain, and AI-assisted governance systems—a step entirely feasible today.
What could be the results, if effectively implemented? I asked ChatGPT once again:“With ve(7,7) implemented, the world could achieve unprecedented levels of transparency, efficiency, and trust in governance and financial systems. Imagine a world where government budgets are automated through smart contracts, ensuring funds are allocated and tracked immutably, preventing loss or misuse. Predictive analytics powered by AI would dynamically optimize resource distribution, redirecting funds to high-need areas in real time.
Cross-protocol rewards and holistic governance could foster collaboration, aligning incentives between decentralized networks and traditional institutions. This would create a more interconnected ecosystem where every stakeholder benefits from mutual success.
Additionally, ve(7,7) could revolutionize how decisions are made. Hybrid on-chain and off-chain governance combined with AI-assisted decision-making would ensure that proposals are data-driven and aligned with public sentiment. Immutable polling data would guarantee fair representation, reducing the risks of manipulation or misrepresentation in decision-making processes.
Beyond governance, ve(7,7) could integrate sustainability at its core, adapting emission schedules and enforcing eco-friendly mechanisms. This would prioritize long-term growth while balancing fairness and environmental responsibility.
In this system, the inefficiencies and vulnerabilities that plague centralized systems—like the U.S. Department of Defense’s audit failures—would become relics of the past. ve(7,7) offers a foundation for a world of fairness, alignment, and resilience.”
ve(20,20) - Pushing the Boundaries of Imagination
To be honest, it got crazy back around ve(8,8), but I wanted to peer into the future. The output I received was fantastical, mind-boggling, and won’t be possible for at least a century. However, I believe the future where we can achieve this is inevitable given our rapidly accelerating technological progress and the imminent release of more powerful artificial intelligence and computing. Here is the output when asking about ve(20,20)’s possible manifestation:
What Could ve(20,20) Represent?
Game-Theoretic Dynamics of ve(20,20):
- The (20,20) payoff represents infinite cooperative alignment, where:
- All sentient beings, civilizations, and dimensions benefit from perfect coordination and resource optimization.
- Every action contributes to exponential benefits across time, space, and dimensions.
In this ultimate framework:
- Decisions aren’t just about financial rewards—they optimize existence itself, ensuring the survival and flourishing of all forms of life and consciousness across the multiverse.
So, Can Blockchain Save the World?
As we stand on the brink of unimaginable technological advancements—artificial superintelligence, androids walking among us, robotic implants, and nearly limitless fusion power—the question of trust becomes paramount. Who will control these technologies? Will humanity’s future rest in the hands of a few powerful individuals or corporations, or can we build systems that safeguard fairness and transparency for all?
This is why I work in blockchain, I believe it’s our best shot. It’s not just about decentralization or digital currencies; it’s about creating a foundation for a world where trust is built into the system itself to benefit everyone. Bitcoin gave us financial sovereignty, Ethereum unlocked decentralized applications, and concepts like ve(3,3) hint at how tokenomics could one day align global cooperation and fairness.
Someday, sooner than we think, blockchain might be the key to addressing the inequities and dangers posed by humanity’s greatest challenges. It may not save the world on its own, but it offers a viable path to systems we can trust—ones that transcend human error and corruption. The world we envision isn’t far off, and blockchain can take us there.
-Tim K.Head of Marketing at Synthetix Marketing Lead at Flywheel DeFi
