There are a multitude of Blockchain-based physical infrastructure systems,
operating on a crypto-currency enabled token economy, where infrastructure
suppliers are rewarded with tokens for enabling, validating, managing and/or
securing the system. However, today's token economies are largely designed
without infrastructure systems in mind, and often operate with a fixed token
supply (e.g., Bitcoin). This paper argues that token economies for
infrastructure networks should be structured differently - they should
continually incentivize new suppliers to join the network to provide services
and support to the ecosystem. As such, the associated token rewards should
gracefully scale with the size of the decentralized system, but should be
carefully balanced with consumer demand to manage inflation and be designed to
ultimately reach an equilibrium. To achieve such an equilibrium, the
decentralized token economy should be adaptable and controllable so that it
maximizes the total utility of all users, such as achieving stable (overall
non-inflationary) token economies.
Our main contribution is to model infrastructure token economies as dynamical
systems - the circulating token supply, price, and consumer demand change as a
function of the payment to nodes and costs to consumers for infrastructure
services. Crucially, this dynamical systems view enables us to leverage tools
from mathematical control theory to optimize the overall decentralized
network's performance. Moreover, our model extends easily to a Stackelberg game
between the controller and the nodes, which we use for robust, strategic
pricing. In short, we develop predictive, optimization-based controllers that
outperform traditional algorithmic stablecoin heuristics by up to 2.4×
in simulations based on real demand data from existing decentralized wireless
networks