How to bring prosperity to Babylon and it’s Citizens.

Citizens of Babylon! What can you do to help ensure the growth and stability of the empire? Just perform any of the functions listed in the chart in the boxes that are shades of green! Simplified, staking brings the most prosperity to the empire and it’s citizens while bonding also has an overall positive effect. Alternatively, selling has an overall negative effect on the Empire and all of it’s citizens. The chart bellow is a Babylonianized take on (3,3), Game Theory and the Prisoners Dilemma. These will be covered in more detail over the course of the article.

What is game theory? Game theory is a theoretical framework to conceive social situations among competing players and produce optimal decision-making of independent and competing actors in a strategic setting. There are many different game types associated with Game Theory but today we’re going to focus on the game type Olympus DAO pioneered in the crypto world: the “Non-Zero Sum Game” and the corresponding “Prisoner’s Dilemma.”

A Non-Zero-Sum Game is a situation where one’s win does not necessarily mean another’s loss, and one’s loss does not necessarily mean that the other party wins. In a Non-Zero-Sum Game, all parties could gain, or all parties could lose. OHM used an example called the “Prisoner’s Dilemma” to introduce the concept to holders.

The Prisoner’s Dilemma is a Non-Zero-Sum Game with these parameters:

Two members of a criminal organization are arrested and imprisoned. Each prisoner is in solitary confinement with no means of communicating with the other. The prosecutors lack sufficient evidence to convict the pair on the principal charge, but they have enough to convict both on a lesser charge. Simultaneously, the prosecutors offer each prisoner a bargain. Each prisoner is given the opportunity either to betray the other by testifying that the other committed the crime, or to cooperate with the other by remaining silent. The possible outcomes are:

• If A and B both remain silent, both of them will serve only one year in prison (on the lesser charge).
• If A remains silent but B betrays A, A will serve three years in prison and B will be set free
• If A betrays B but B remains silent, A will be set free and B will serve three years in prison
• If A and B each betray the other, each of them serves two years in prison

This game is represented by this chart:

The Y-axis represents “Player A” and their actions while the X-axis represents “Player B” and their actions. The boxes in the charts contain the consequences of Player A and Player B’s actions.

The best possible outcome, in terms of total time served, comes from Player A and Player B cooperating with one another and this results in both Players serving 1 year for a total of 2 years. If one player stays silent while another betrays then it results in slightly worse overall situation , in terms of time served, with a total of 3 years being served. The worst possible outcome in this scenario is both Player A and Player B betraying one another resulting in a total punishment of 4 years served.

Olympus Dao applied this theory to Staking, Bonding and Selling however we will now be discussing in terms of BBY since the concepts are the same.

Holders of $BBY can perform 3 separate actions with their tokens each of which have separate consequences on the protocol and the people involved.

1) $BBY Holders can stake a token for an impressive APY and help stabilize the price by removing tokens from the market. This process is advantageous to the health of the protocol and the users.

2) $BBY Holders can bond to Babylon and in turn receive BBY at a discounted price. This process is also advantageous to the health of the protocol and the users.

3) $BBY Holders can sell their tokens on the open market. This option drives the price of of $BBY down and has an adverse effect on the protocol and the users. This chart was created to display those principles in relation to OHM however we will be discussing it while referencing BBY from now on.

These principles are represented in the form of this Chart:

So once again the Y-axis represents “Player A” and the X-axis represents “Player B.”

4 green boxes represent positive outcomes for the players and the protocol.

• The best possible outcome for the protocol based on players choices is represented by the dark green square and the number pair (3,3). Both Player A and Player B stake.
• The next best outcome is in the slightly lighter green boxes with the number pairs of (3,1) and (1,3). These are the options where one player Bonds and one player stakes.
• The last positive outcome for the protocol and the users is represented in the lighter yet green colored box and is represented by the number pair (1,1). Both players Bond.

4 Yellow Boxes Represent Neutral Outcomes for the players and the protocol.

• All of the yellow boxes represent net neutral outcomes to the protocol based on one player selling while one player bonds or stakes. These are represented by the number pairs (1,-1) and (-1,1).

Finally 1 single red box represents an overall negative outcome for the players and the Protocol.

• This red box containing the number pair (-3,-3) represents the worst possible outcome for the players and the protocol. In the scenario both players sell their BBY.

So all that is left now is to stylize this and make it into something more worthy of Babylon! Once again here is the stylized version:

In this version some stylized changes have been made. Instead of numbers we will use hourglasses.

• The number 3 is replaced with an Hourglass just beginning to flow from the top bulb down.
• The number 1 is replaced with an Hourglass that is on it’s way to filling up the bottom bulb.
• The number -1 is replaced with an Hourglass that is almost done filling up the bottom bottom bulb.
• Finally the number -3 is replaced with an Hourglass that has completely filled up the bottom bulb.

*Disclaimer. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this medium constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.