Strategy Phenomena and Development
The Prisoners’ Dilemma
The Prisoners’ Dilemma is a popular thought experiment in game theory. It also happens to be at the core of what makes Straato so exciting.
Imagine that a market Reset has just occurred and you were one of the users that held Straato at the top, when the Reset occurred. You started with 10 assets, but now only have 8 after the asset adjustment was applied. You bought your original 10 assets at $3, but now the price is Reset to the minimum price floor of $1. You are hesitant to sell now and take a loss, as opposed to waiting and potentially even turning your loss into a sizable gain.
The problem is that all of the other users that lost Straato in the Reset are in your same position. None of them want to sell until they can make back the funds that they lost. The Straato market maker is unable to stimulate the Marketplace enough to drive the price back up above what you and your fellow owners are waiting for, with only ~20% of assets inherited in the Reset.
If no one sells, the Marketplace will be stuck. Another Reset will occur and no one new will be able to play – you will be in an even deeper hole and everyone else would be bored, locked out on the Marketplace sidelines.
This is the Prisoners’ Dilemma of the situation. If neither you nor the other owners sell, all of you will continue to lose in the next Reset. If you decide to sell, it is possible that you will lose more than if you had waited. For this reason, collaboration between owners in the Marketplace is encouraged. You can band together and work out a solution on the Straato Community Discord and overcome the Prisoners’ Dilemma.
Think carefully and judge the actions of other owners – the shrewdest individuals will have the most fun and success in Straato! This is what makes it such a uniquely strategic economy – there is no chance, no external components, only mind against mind in the ultimate economic strategy competition.
Creating a Strategy
Straato is not designed for investing in the traditional sense, like the stock market. As opposed to focusing on small returns over long periods of time, Straato encourages big returns over short periods of time. Unfortunately, this can also lead to theoretical big losses in the short term.
That being said, when designing a strategy, we encourage you to consider the components of the Straato Marketplace that make it unique and leverage the variety of built-in functions to encourage behavior in the Marketplace. Focus on big returns in your portfolio and take calculated risks! If you happen to have Straato when a Reset occurs, there is always the opportunity to recoup your losses in the next cycle – that is the beauty of the cyclical economy. Each cycle starts a clean slate and an opportunity for greater profit or to regain past losses. One strategy, ideal for the marketplace, is a gradual selloff. If you lose assets in the Reset, try to sell your assets off gradually – this will ensure that a preemptive Reset doesn’t occur, while still potentially netting you your losses back. It is an easy way to eliminate the Prisoners’ Dilemma and is a safer strategy than trying to wait until the price is at its highest to sell again. Straato will not generally reward greed or over-hedging!