Formalizing and Simulating the Token Aspects of Blockchain-based Research Collaboration Platform using Game Theory

Small and Medium-scale Enterprises (SMEs) need a platform that actively enables collaboration with Research institutions and consultants since SMEs lack the financial resources to conduct independent research. Such a platform will require a verifiable manipulation-free system for enabling, executing, and recording collaboration activities and tracking reputations among the organizations and individuals that use the platform. Blockchain provides an opportunity to build such a collaborative platform by enabling the verifiable recording of outcomes from collaborations, aggregating the resulting reputation of the collaborating parties, and offering tokenised incentives for rewarding positive contributions to the platform. Cryptocurrencies from which blockchain-based tokens are highly unstable, thereby, reducing business organisations’ interest in blockchain applications. Hence, there is a need to design a self-sustaining valuable token model that incentivises user behaviours that positively contribute to the platform. This paper explores the application of game theory in analyzing token-based economic interactions between the various groups of users in a blockchain-based collaboration platform to design and simulate a token distribution system that provides a fair reward mechanism for the users while also providing a dynamic pricing model for the utility value provided by the platform tokens. Furthermore, the paper analyzed potential risks on the token model design and propose mitigation strategies.