Strategic Participation on Tokenized Platforms: Balancing Investment and Labor Intensities

Abstract

Participants on tokenized platforms (i.e., platforms with blockchain implementation) can simultaneously take multiple roles, such as user, investor, and laborer, and draw income from the last two roles. Unlike traditional markets that typically prioritize one means of profitable participation, participants on such platforms need to allocate their efforts on the platform to increase revenue. We developed a decision framework for determining participants’ strategic participation on tokenized platforms to maximize earnings from investment and labor. Individual participants were distinguished from the platform-average participant, and decision-making is cast into two subproblems: (1) ignoring individual actions’ impact on platform state, we constructed strategies based on metrics that characterized model projections of future platform development and derived the metrics from Monte Carlo ensembles; (2) considering individuals’ actions as explicitly influencing the platform state, we formulated the control problem as a Markov decision process and solved it via reinforcement learning (RL). The framework addresses parameter uncertainty from model estimation, system uncertainty in model projection, and input uncertainty during participant-platform interaction. We compared metric-based and RL strategies from the two solution approaches using historical token price series; the results suggest good performance of our decision framework.