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How Blockchain Tech Advances Benefit Other Industries

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Exploring Mechanism Design in Blockchain

This chapter focuses on mechanism design as a pivotal aspect of blockchain technology, illustrating its role in optimizing resource allocation and addressing issues like trust and collusion in decentralized systems. It contrasts traditional auction mechanisms with blockchain applications, particularly examining the challenges posed by collusion and the innovative solutions that arise, such as Ethereum's EIP-1559 transaction fee mechanism. Through a blend of economic theory and practical examples, the discussion highlights the transformative potential of blockchain when traditional frameworks are adapted for decentralized contexts.

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