Nexus Mutual partners with Incentivai to test smart contract mechanism design.

Hugh Karp
Hugh Karp
Mar 22, 2018 · 3 min read

Token economics and creating incentive structures that lead to mutually beneficial outcomes are an exciting area of research and are fundamental to what we are building at Nexus Mutual.

External work from outside the blockchain is required to make many dApps operate effectively. In Nexus Mutual’s case, creating a decentralised discretionary mutual will require individuals to vote on claims assessment and governance activities as well as underwrite smart contracts (the process of auditing and deeming them to be secure). As payment for this work the mutual will provide token incentives but as its architects we need to be confident the incentives will actually lead to the outcomes we desire.

In particular, how can we get confidence that the parameters are set correctly, that there aren’t any game theoretic attacks and the end outcomes will eventuate as intended? While we will perform lots of modelling, conduct peer reviews as well as source feedback from the community we also want to do more.

That is why Nexus Mutual and Incentivai have decided to partner up and learn together in this growing new field of token economics. Token economics is at the very beginning of what could be a fundamental shift in how the world coordinates human and computer driven work. While there is huge potential we firstly need to learn by increasing our understanding of what structures work, which don’t and just as importantly, why. These steps are critical as we move from the current token incentive models, which are relatively simple, into more complicated structures that may be required to address specific real world problems.

Incentivai can provide invaluable insight into this process by using machine learning techniques to train AI agents. These agents can then simulate how users might interact with smart contracts. With the end result being a method to effectively battle test smart contract incentive structures before they are deployed.

Not only that, the process will produce interpretable feedback that enables parameters to be fine-tuned and many game theoretic attacks to be identified and removed deploying an immutable contract to main-net. This is incredibly important from a security perspective as smart contracts are deployed to a hostile environment with many experts trying to game them in an attempt to extract value. In Nexus Mutual’s situation we need a very high level of confidence in our incentive structures before putting real money on the line and Incentivai’s novel approach can help provide that confidence.

Both Nexus Mutual and Incentivai will report back once we learn more throughout the process. We are hopeful the partnership will provide valuable lessons not only for each other but also for the entire Ethereum community.

Nexus Mutual

A people-powered alternative to insurance. A blockchain based mutual platform. Built on Ethereum.

Hugh Karp

Written by

Hugh Karp

Founder at Nexus Mutual. Blockchain. Insurance.

Nexus Mutual

A people-powered alternative to insurance. A blockchain based mutual platform. Built on Ethereum.