Pricing the Unprovable: Ambiguity, Turnstile Runs, and the Verifiability Discount in Crypto Protocols
The paper introduces the 'verifiability discount,' a concept quantifying how uncertainty about past vulnerabilities reduces potential value after a protocol repair. It uses a turnstile model to show how early withdrawal shifts risk and argues that credible evidence becomes more valuable as exposure grows. The framework suggests design priorities focused on privacy-preserving evidence, limiting single-flaw exposure, and explicitly disclosing residual uncertainty.