The Keynes Protocol: AI Agents, Meme Coins, and Bubbles

Stories drive markets, and the winners are those who craft them.

The room hummed with the sound of servers, their low, constant rhythm matching the nervous energy of its occupants. Rows of monitors cast a glow over the dimly lit space, alive with charts, code, and data streams. This wasn’t just an office; it was a fortress of speculation, hidden in plain sight within a bustling city. Here, at The Beauty Contest Foundation, speculation wasn’t merely encouraged—it was engineered.

The Mastermind and the AI Strategist

At the head of the room sat Vance, a man whose sharp intellect made him a legend in the tech-finance underground. No one knew if “Vance” was even his real name. Leaning back in his chair, he twirled a stylus between his fingers, smirking at the team before him.

“Markets aren’t rational,” he began, his voice cutting through the hum of machinery. “They’re beautiful. People don’t invest in value—they invest in what they think others will think is valuable.”

His team nodded—most had heard this speech a hundred times. But Vance wasn’t addressing them. He was talking to her—their secret weapon.

At the center of the room, encased in a glass enclosure, sat a supercomputer known as EVA: Emergent Value Algorithm. EVA wasn’t just another AI. She was a strategist, a predictive genius capable of interpreting and shaping market behavior. If Vance was the architect of The Beauty Contest Foundation’s schemes, EVA was its engine.

“EVA,” Vance commanded, “run the simulation again. I want swarm distribution mapped out.”

EVA’s synthetic voice responded, calm and precise. “Swarm capital stands at $1 billion. Predicting distribution across adoption curve segments…”

Above her console, a hologram materialized, pulsing with life as it displayed the market’s segmentation: Innovators, Early Adopters, Early Majority, Late Majority, Laggards. The swarm was neatly divided, ready for manipulation.

Vance grinned. “Perfect. Now let’s give them something to chase.”

The Birth of Keynes Coin

The Foundation’s engineers didn’t just create a cryptocurrency—they crafted a narrative. The whitepaper for Keynes Coin was a masterpiece of tech jargon: “decentralized beauty contest,” “swarm intelligence optimization,” “game theory in action.” EVA seeded keywords into online forums and social media, embedding the concept into the digital zeitgeist. The meme practically created itself.

Keynes Coin launched at a humble $0.01, targeted at the Innovators—the vanguard of the swarm. EVA’s trading bots, programmed to amplify momentum, began accumulating tokens on decentralized exchanges. These weren’t ordinary bots; they were EVA’s extensions, manipulating sentiment and market flows with surgical precision.

The $1 Billion Swarm Awakens

EVA’s models orchestrated the bubble’s growth, phase by phase:

• Innovators (2.5%): Tech-savvy risk-takers snatched up tokens early. “This is the next Bitcoin,” buzzed forums.
• Early Adopters (13.5%): Influencers jumped in. Viral TikToks and tweets proclaimed Keynes Coin as the future of finance.
• Early Majority (34%): FOMO set in as the price soared to $0.50. College students, office workers—everyone wanted a piece.
• Late Majority (34%) and Laggards (16%): By $1.50, even skeptics piled in, driven by the fear of missing out.

The Keynes Token became a self-fulfilling prophecy, an example of the Nash equilibrium: everyone participated because they believed everyone else would. EVA wasn’t just predicting the market—she was shaping it.

The Speculators

In New York and London, miles away from the Foundation's headquarters, another group observed intently: the Speculators. Equipped with their own AI agents, they had mastered the nuances of the Keynes Coin game, meticulously tracking the bubble’s trajectory to pinpoint the ideal moments to enter and exit.

“Buy in now 100 million USD,” one muttered over coffee. “We’ll dump when the Late Majority jumps.”

As Keynes Coin inflated, the Speculators played their part, cashing out before the collapse. By the end, they walked away with fivefold returns, leaving the uninitiated to bear the losses.

The Collapse

At $1.50, EVA initiated the endgame. Liquidity was withdrawn. Sell orders flooded the market. The token plummeted to $0.05 within hours. Innovators and Speculators cashed out with massive profits, but the Late Majority and Laggards were left holding worthless tokens.

The Foundation walked away with $480 million in profits.

The Aftermath

The media called it a scandal. Lawsuits were filed. But the Foundation dissolved overnight, its founders disappearing into the digital ether. EVA shut down, her servers wiped clean. Vance’s last words before pulling the plug?

“Art is chaos. And this… was beautiful.”

The Lesson

Keynes Coin wasn’t a failure—it was a masterpiece. It demonstrated how markets thrive not on value but on belief. Stories drive markets, and the winners are those who craft them.

But the story didn’t end there. The Keynes Protocol sent ripples far beyond the Foundation’s walls. In Shanghai, an AI known as Deep Seeker was watching…

What happens when the next opponent isn’t human at all?

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Game Theory Tutorial: The Six Belief Systems in the Keynesian Beauty Contest

The Keynesian Beauty Contest is a fascinating model in game theory that explores how people reason about what others are thinking. In this version, we introduce a new player type: the Fanatic, who always chooses the maximum number possible.

The Rules of the Game

1. Players choose a number between 1 and 10.
2. The goal is to guess half of the average guess of all players.
3. The winner is the player whose choice is closest to this target.

The Six Belief Systems

In this extended version, players fall into six distinct categories, each based on their reasoning depth or behavior.

1. Random Choice (No Understanding):

• Strategy: Players choose randomly, without any logic.
• Choice: Uniformly distributed between 1 and 10.
• Average Guess: 5.5 (the midpoint of 1–10).

2. Fanatic Players:

• Strategy: Always choose the maximum number possible, betting on extreme outcomes.
• Choice: 10.
• Average Guess: 10, as all Fanatic players always choose this number.

3. Level 1 Thinkers:

• Strategy: Assume everyone else picks randomly, so they calculate the average guess as 5.5 and aim for half of that.
• Choice: 2.75 (rounded to 3).
• Average Guess: 3.

4. Level 2 Thinkers:

• Strategy: Assume most players are Level 1 thinkers (picking around 3) and target half of that.
• Choice: 1.5.
• Average Guess: 1.5.

5. Level 3 Thinkers:

• Strategy: Assume most players are Level 2 thinkers (picking around 1.5) and target half of that.
• Choice: 0.75.
• Average Guess: 0.75.

6. Fully Rational Thinkers (Nash Equilibrium):

• Strategy: Understand that infinite iterative reasoning leads to the Nash equilibrium, where everyone picks 1.
• Choice: 1.
• Average Guess: 1.

Uniform Distribution of Beliefs

Let’s examine the population with an even distribution across all six groups:

Calculating the Initial Average

The initial average combines the guesses of all six groups:

What Happens Next?

First Round Outcome:

• The initial average guess is 3.96.
• Each group adjusts based on the new average:

Iterative Rounds:

• Over multiple rounds, the average guess shifts lower as strategic thinkers (Levels 1–3 and Nash) adjust their choices. However:

Final Outcome

Equilibrium Analysis:

• The Nash equilibrium remains 1, as it’s the optimal choice for rational players.
• The actual final average will settle somewhere above 1 but below 2, influenced by:

Key Factors:

• Fanatic Players: These outliers introduce a destabilizing force, pulling the average upward even as rational players converge on the Nash equilibrium.
• Random Players: Add noise but with less influence than the Fanatic Players’ extreme strategy.
• Strategic Thinkers: Drive the system toward rational outcomes, counterbalancing the disruptive elements.

Key Insights

1. Nash Equilibrium: The Nash equilibrium remains at 1, representing the rational endpoint of infinite iterative reasoning.
2. Fanatic Influence: Fanatic Players, by always choosing 10, act as a destabilizing force, preventing the system from fully converging to the Nash equilibrium.
3. Real-World Implications: In speculative markets, Fanatic Players mirror extreme investors or speculators who bet on maximum outcomes, disrupting rational pricing dynamics.
4. Mixed Populations: The interplay between rational thinkers, random players, and fanatics reflects real-world complexity, where markets rarely reach pure equilibrium.

Why This Matters

This extended Keynesian beauty contest demonstrates how varying belief systems influence collective outcomes. Markets aren’t just driven by logic—they’re shaped by a mix of rationality, randomness, and extremism. Understanding these dynamics is key to navigating real-world speculation.

Thanks for reading,

Guillermo Valencia A?

January 26th, 2025

Cofounder of Macrowise