Agent-Based Simulation for Token Launches

What you'll learn

• Why You Cannot "Math Your Way" to a Token
• cadCAD: Block Science's Generalized Framework
• TokenSPICE: Trent McConaghy and Ocean Protocol Origins
• Machinations.io: Visual Game-Design-Style Modeling
• Gauntlet: Continuous Risk Parameter Optimization
• What Pre-Launch Simulations Actually Test

Key terms

Agent-based simulation

A methodology for modeling complex systems by representing many individual agents (each with its own behavior rules) and observing emergent system-level dynamics. The dominant pre-launch token-design methodology for serious protocols.

cadCAD

Complex Adaptive Dynamics Computer-Aided Design. Open-source Python framework developed by Block Science for agent-based simulation of token economies. Used by MakerDAO, Compound research, and many other protocols.

TokenSPICE

Open-source agent-based simulator developed by Trent McConaghy (Ocean Protocol co-founder). Opinionated toward crypto-economy patterns with pre-built agent templates for common roles (speculator, LP, arbitrageur, holder).

Machinations.io

Visual node-based modeling tool originally for video-game economies, adopted for crypto token-flow modeling. Strong for early-stage exploration of mechanism designs before detailed quantitative analysis.

Gauntlet

Risk-parameter management firm founded by Tarun Chitra. Primary external risk advisor to Aave (since 2020-2021), Compound, and Uniswap. Provides continuous agent-based simulation of live protocols with recommended parameter updates submitted to governance.

Chaos Labs

Competitor to Gauntlet in the risk-parameter optimization space. Provides parameter analysis for Aave, MakerDAO, Liquity, and others. The category is now competitive with multiple expert firms.

Liquidation cascade

A scenario where one set of liquidations crashes the collateral asset price, triggering further liquidations, which crashes the price further. The March 2020 MakerDAO event is the canonical example. Pre-launch simulation aims to verify the system can handle severe shocks without cascading.

Monte Carlo simulation

A statistical method that runs many randomized paths of a system to estimate distributions of outcomes. Used in cadCAD and Gauntlet's tooling to estimate tail risk, expected returns, and parameter sensitivities under uncertainty.

Risk parameter

A configurable value in a DeFi protocol that controls risk exposure — loan-to-value ratio, liquidation threshold, interest rate curve, debt ceiling, reserve factor, etc. Optimizing these for live conditions is the core service Gauntlet and competitors provide.

Black Thursday

March 12, 2020. ETH crashed 50% in a day, gas prices spiked, and MakerDAO's liquidation auctions cleared ETH at 0 DAI bids because liquidators could not get transactions through. Resulted in $5.4M in bad debt and a fundamental redesign of MakerDAO's auction mechanism. Canonical example of what proper pre-launch stress testing aims to catch.