2 Search Results for "Tirole, Jean"

Document
DOI: 10.4230/LIPIcs.ITCS.2026.93
Analyzing the Economic Impact of Decentralization on Users

Authors: Amit Levy, S. Matthew Weinberg, and Chenghan Zhou

Published in: LIPIcs, Volume 362, 17th Innovations in Theoretical Computer Science Conference (ITCS 2026)

Abstract
We model the ultimate price paid by users of a decentralized ledger as resulting from a two-stage game where Miners (/Proposers/etc.) first purchase blockspace via a Tullock contest, and then price that space to users. When analyzing our distributed ledger model, we find: - A characterization of all possible pure equilibria (although pure equilibria are not guaranteed to exist). - A natural sufficient condition, implied by Regularity (à la [Myerson, 1981]), for existence of a "market-clearing" pure equilibrium where Miners choose to sell all space allocated by the Distributed Ledger Protocol, and that this equilibrium is unique. - The market share of the largest miner is the relevant "measure of decentralization" to determine whether a market-clearing pure equilibrium exists. - Block rewards do not impact users' prices at equilibrium, when pure equilibria exist. But, higher block rewards can cause pure equilibria to exist. We also discuss aspects of our model and how they relate to blockchains deployed in practice. For example, only "patient" users (who are happy for their transactions to enter the blockchain under any miner) would enjoy the conclusions highlighted by our model, whereas "impatient" users (who are interested only for their transaction to be included in the very next block) still face monopoly pricing.
Cite as

Amit Levy, S. Matthew Weinberg, and Chenghan Zhou. Analyzing the Economic Impact of Decentralization on Users. In 17th Innovations in Theoretical Computer Science Conference (ITCS 2026). Leibniz International Proceedings in Informatics (LIPIcs), Volume 362, pp. 93:1-93:21, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2026)

Copy BibTex To Clipboard

@InProceedings{levy_et_al:LIPIcs.ITCS.2026.93,
  author =	{Levy, Amit and Weinberg, S. Matthew and Zhou, Chenghan},
  title =	{{Analyzing the Economic Impact of Decentralization on Users}},
  booktitle =	{17th Innovations in Theoretical Computer Science Conference (ITCS 2026)},
  pages =	{93:1--93:21},
  series =	{Leibniz International Proceedings in Informatics (LIPIcs)},
  ISBN =	{978-3-95977-410-9},
  ISSN =	{1868-8969},
  year =	{2026},
  volume =	{362},
  editor =	{Saraf, Shubhangi},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/LIPIcs.ITCS.2026.93},
  URN =		{urn:nbn:de:0030-drops-253805},
  doi =		{10.4230/LIPIcs.ITCS.2026.93},
  annote =	{Keywords: Blockchain, Cryptocurrency, Blockspace Markets, Decentralization, Distributed Ledgers, Equilibrium Analysis, Tullock Contests}
}
Document
Invited Talk
DOI: 10.4230/OASIcs.Tokenomics.2020.1
Some Economics of Fintech (Invited Talk)

Authors: Jean Tirole

Published in: OASIcs, Volume 82, 2nd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2020)

Abstract
The contours of digital payments are still in the making. Recent years have seen the emergence of new instruments best exemplified by public cryptocurrencies like Bitcoin or Big Tech payment systems like Alipay. These developments in the private sector have in turn fueled discussions and projects around the creation of central bank digital currencies. Digital currencies have a lot to offer. They can provide consumers with user-friendly low-cost means of payment and facilitate the integration of payment systems across borders. They may also offer alternatives in countries with dysfunctional national monetary systems. On the supply side, private digital currencies can be a source of funding (e.g., initial coin offerings) and allow businesses to retain consumers and to collect information. Which form of digital currency will eventually prevail has yet to be seen. Popular permissionless cryptocurrencies lack in their current form the price stability necessary to serve as a store of value: accepting a payment in Bitcoin exposes a merchant to costly financial risk. Stable coins pegged to a central-bank currency and backed by safe collateral are an attempt to dim excess volatility (e.g., Tether or Libra). But this guarantee creates new challenges: collateral must be segregated and prudentially supervised to ensure consumer protection. It is unclear which authority would have the capacity and incentives to provide that supervision for a global digital currency. More generally, a private global digital currency would raise a range of public policy issues ranging from tax fraud and money laundering control, to loss of seignorage revenue, impediments to monetary policy and potential threat to financial stability. In that context, Central Bank Digital Currencies (CBDC) may provide a solution that combines the convenience of private digital money with the institutional support of a state. But the scope of a CBDC’s deployment needs to be carefully calibrated: a CBDC directly held by wholesale or retail depositors would compete with bank deposits, possibly limiting banks’ ability to engage in their essential function of maturity transformation through long-term credit. Overall, the deployment of new technologies for payments has the potential to create meaningful value for consumers. However, technological disruption does not upend the fundamental economic principles that have shaped our financial systems and its regulatory framework. Applying these principles may be our best chance to understand the ongoing Fintech revolution.
Cite as

Jean Tirole. Some Economics of Fintech (Invited Talk). In 2nd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2020). Open Access Series in Informatics (OASIcs), Volume 82, p. 1:1, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2021)

Copy BibTex To Clipboard

@InProceedings{tirole:OASIcs.Tokenomics.2020.1,
  author =	{Tirole, Jean},
  title =	{{Some Economics of Fintech}},
  booktitle =	{2nd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2020)},
  pages =	{1:1--1:1},
  series =	{Open Access Series in Informatics (OASIcs)},
  ISBN =	{978-3-95977-157-3},
  ISSN =	{2190-6807},
  year =	{2021},
  volume =	{82},
  editor =	{Anceaume, Emmanuelle and Bisi\`{e}re, Christophe and Bouvard, Matthieu and Bramas, Quentin and Casamatta, Catherine},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/entities/document/10.4230/OASIcs.Tokenomics.2020.1},
  URN =		{urn:nbn:de:0030-drops-135239},
  doi =		{10.4230/OASIcs.Tokenomics.2020.1},
  annote =	{Keywords: Cryptocurrency, Stable Coin, Central Bank Digital Currency, Fintech, Financial Regulation}
}
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