Positive Suspicion Chain

+-----------------------------------------------------------+
|               POSITIVE SUSPICION CHAIN                     |
+-----------------------------------------------------------+
|                                                           |
|   You don't know what others think                        |
|   But you assume what they think                          |
|   Your behavior affects their assumptions --> LOOP        |
|                                                           |
+-----------------------------------------------------------+

Concept Definition

Suspicion Chain: A game theory concept where participants don't know the true thoughts of other participants, but make assumptions based on observable signals. These assumptions affect their own behavior, which in turn affects others' assumptions.

Positive Suspicion Chain: When this cycle generates positive feedback, trust strengthens, expectations improve, and price/TVL/participation increases.

Negative Suspicion Chain: When the cycle generates negative feedback, trust collapses, expectations deteriorate, and the scheme eventually crashes.

Application in Schemes

Signals & Assumptions

Self-Reinforcing Cycle

Positive cycle:
Good signal → Good assumption → Positive behavior → Better signal → ...

Negative cycle:
Bad signal → Bad assumption → Negative behavior → Worse signal → ...

Operator Insights

1. Manufacture Signals: Most important in early stages to create strong positive signals
2. Guide Assumptions: Use narrative and KOLs to guide market interpretation of signals
3. Maintain Cycle: Continuously invest resources to maintain the positive cycle
4. Identify Critical Points: Know when the cycle will reverse

Relationship to Three-Ponzi Theory

The essence of all schemes is maintaining a positive suspicion chain until exit

Next: Industrialization Theory