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Burn-and-Mint Tokenomics & Sending Spies

Two shorter game-theoretic papers, paired here for thematic overlap: when does deflationary burn-and-mint tokenomics collapse, and can pool mining respond to block-withholding attacks by sending spies of its own?

Burn-and-Mint Tokenomics — IEEE WF-IoT 2023 (DOI) Burn-and-Mint Tokenomics — open access (ZORA) Sending Spies as Insurance — DEXA 2022 Workshops (DOI)

Burn-and-Mint Tokenomics: Deflation and Strategic Incentives

Burn-and-mint is a common tokenomics pattern in DePIN and usage-based networks: usage burns tokens, and rewarding network contributors mints new ones. Left unchecked, deflation from burning can outpace the minting needed to keep contributors adequately paid — but too little deflation defeats the point of a scarce, appreciating asset in the first place. This paper puts a formal, game-theoretic frame around that tension. From the published abstract:

"We provide a game-theoretic analysis of deflationary burn-and-mint tokenomics, studying individual incentives, theoretically and through numerical simulations, to identify the circumstances under which economic collapse can be avoided. We identify a necessary deflation threshold to guarantee a preservation of value and propose to fix rewards in fiat as a remedy to the asymptotic underincentivization of network contributors occurring in deflationary burn-and-mint."

Two results carry directly into practice. First, there is an explicit deflation threshold — a boundary condition on how aggressively a network can burn tokens before the incentive to contribute erodes faster than the token appreciates. Second, the paper's proposed remedy — pegging contributor rewards to a fiat value rather than a fixed token quantity — directly counters the asymptotic underincentivization that pure burn-and-mint schedules otherwise drift toward as the token's price rises and a fixed token reward becomes worth less in real effort terms.

This is directly applicable to the DePIN and infrastructure-network tokenomics work on this site — reward schedules that burn on usage and mint on contribution are exactly the pattern this paper's threshold condition applies to.

Sending Spies as Insurance Against Bitcoin Pool Mining Block Withholding Attacks

Block withholding is a known attack against Bitcoin mining pools: a miner joins a pool, submits partial proof-of-work shares to collect a share of the pool's reward, but deliberately withholds any full block solution it finds — draining the pool's effective payout without ever contributing to a found block. The attacker's own pool benefits at the victim pool's expense, and the attack is difficult to detect from inside the victim pool alone, since a withheld solution looks identical to ordinary bad luck.

This paper's title states its core move directly: rather than treating "spies" purely as the attacker's tool, it explores sending spies defensively — using the same infiltration mechanism as insurance, giving a pool visibility into whether it is itself being targeted by block withholding, rather than only playing defense passively. The full mechanism, its equilibrium conditions, and the strength of the resulting insurance are set out in the paper itself; this page is deliberately scoped to what's confirmed from the published title, authorship, and venue — the paper sits behind a Springer paywall with no open-access copy and no local draft, so a fuller treatment is held for when the full text is in hand.

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