SAGA Economic Model Analysis: Adopting “Musical Chair Pricing” on the Road to Affordable Blocks

The essence of SAGA’s business model is to distribute block space to downstream demand parties. A key issue involved is how to price. SAGA adopts a unique “musical chair pricing”:

1. Assume that there are a=12 validators in the initial state, and SAGA hopes to select 8 of them for entrusted verification;
2. First, SAGA selects a certain number of validators to enter the bidding process based on the pledge rate ranking, for example, p= 10, then the 11th and 12th ranked validators will be eliminated;
3. The next 10 validators will make quotations, sort them from low to high, and select 8 of them as delegated validators. The price is determined based on the highest price among the 8 validators. Validators No. 2 and No. 7 who quoted prices of $6 and $8 were eliminated, leaving 8 validators shortlisted and agreed to price at $5.

#This mechanism seems very complicated, but it can achieve one goal: to provide the cheapest possible block space (or effective pricing) through involution.

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