ORIZON Game Theory Explanation

In the simplest ORIZON model, there are two players and three possible actions:

-Stake ORI -Buy Bonds -Sell ORI

When ORI staking rewards increase and the ORI price rises, players are more inclined to stake ORI. When players predict that staking rewards will decrease and the price will drop, they are most likely to sell ORI. When players are not significantly negatively impacted and have no clear inclination, they prefer to buy bonds (since bonds are discounted and offer arbitrage opportunities; the bond discounts will be detailed in the third part of the white paper on bond contracts). Staking ORI can push the price up by +2, while selling ORI depresses the price by -2. Players engaging in ORI trading can gain a 50% profit. Buying bonds without staking ORI does not affect the price, but because bonds are discounted, the profit is +1.

	Stake	Bond	Sell
Stake	(3,3)	(1,3)	(-1,1)
Bond	(3,1)	(1,1)	(-1,1)
Sell	(1,-1)	(1,-1)	(-3,-3)

From the table above, we can see that the optimal strategy is for both players to cooperate, with both staking, resulting in a payoff of 6. If one buys bonds and the other stakes, the result is 4. Selling/staking and selling/buying bonds offset each other, resulting in a neutral payoff of 0. The worst outcome is when both players distrust each other and rush to sell, resulting in -6.

Players' behaviour depends on premiums, market prospects, macroeconomic environment, and a series of other factors. There's no need to pay too much attention to the size or sign of the numbers; the table is merely to illustrate the positive environment created by cooperation. Mutual cooperation yields the best results. If you don't plan to stick around for the long term, we advise you not to participate. We don't need those who sell BTC at $50,000 and buy back at $30,000. Perhaps the ORI you hold is a better BTC.