The Payoff Matrix
In HunnyDAO, to achieve the most desirable outcome where every player stands to get the most gain, players need to cooperate with each other. Currently, there are 3 actions a player can take:
- Staking (+2)
- Bonding (+1)
- Selling (-2)
Staking and bonding are considered beneficial to HunnyDAO, while selling is considered detrimental. Staking and selling will also cause a price move, while bonding does not (we consider buying LOVE from the market as a pre-requisite of staking, thus causing a price movement). If both actions are beneficial, the actor who moves price also gets half of the benefit (+1). If both actions are contradictory, the bad actor who moves price gets half of the benefit (+1), while the good actor who moves price gets half of the downside (-1). If both actions are detrimental, which implies both actors are selling, they both get half of the downside (-1). Thus, given two actors, all scenarios of what they could do and the effect on the protocol are shown here:
- 1.If we both stake (3, 3), it is the best thing for both of us and to HunnyDAO (3 + 3 = 6).
- 2.If one of us stakes and the other one bonds, it is also great because staking takes LOVE token off the market and put it into HunnyDAO, while bonding provides liquidity and BUSD for the treasury (3 + 1 = 4).
- 3.When one of us sells, it diminishes the effort of the other one who stakes or bonds (1 - 1 = 0).
- 4.When we both sell, it creates the worst outcome for both of us and to HunnyDAO (-3 - 3 = -6).