Initial Coin Offering and Platform Building

Li, Jiasun; Mann, William

doi:10.2139/ssrn.3088726

Cited by 169 publications

(118 citation statements)

References 60 publications

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“…This paper contributes to two main streams of literature. First, relating to the literature on digital tokens, it provides empirical evidence indicating the dynamics of network externalities on crypto-tokens, which is consistent with the analysis of Gandal and Halaburda (2016), the model 7 for digital currencies proposed by Gans and Halaburda (2015), models that rely on user-base complementarity as in Cong, Li, and Wang (2018) and Sockin and Xiong (2018), dynamic pricing as in Catalini and Gans (2018), and coordination as in Bakos and Halaburda (2018) and Li and Mann (2018). To the best of my knowledge, this is the first paper to provide evidence consistent with such mechanisms.…”

Section: Introductionsupporting

confidence: 72%

See 1 more Smart Citation

The Economics of Digital Token Cross-Listings

Benedetti

2018

SSRN Journal

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Section: Introductionsupporting

confidence: 72%

“…For instance,Bakos and Halaburda (2018),Catalini and Gans (2018),Cong, Li, and Wang (2018),Li and Mann (2018),Sockin and Xiong (2018),Gandal and Halaburda (2016), andGans and Halaburda (2015).…”

mentioning

confidence: 99%

The Economics of Digital Token Cross-Listings

Benedetti

2018

SSRN Journal

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“…Cong et al (2018) study how tokens facilitate transactions among users in decentralised settings and allow them to capitalise on the future growth of promising platforms. Li and Mann (2018) develop a model that shows how transparent tokens' distribution through an ICO overcomes later coordination failures during platform operation. Chod and Lyandres (2018) show that an ICO can facilitate risk-sharing without dilution of control, while Canidio (2018) studies the interactions induced by ICOs between ex-ante financing and ex-post incentives.…”

Section: Literature Reviewmentioning

confidence: 99%

Serial and large investors in initial coin offerings

Boreiko

Risteski

2020

Small Bus Econ

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This study is the first to provide systematic evidence regarding investor behaviour in initial coin offerings (ICOs), their investment patterns and their role in the success of campaigns. Using hand-collected data on 472 public token sales over the period of 2013-2017, we advance the ICO literature by demonstrating that some contributors often invest in more than one campaign, and such serial investors contribute earlier. However, they are not more informed and fail to pick betterquality ICOs. Only large serial investors invest more in campaigns that raise more funds, attract more contributors, are more likely to reach their hard caps, and distribute tokens that are listed on crypto exchange. Our findings raise the question of whether regulatory or industry self-regulation agreements on information provision measures are needed to protect smaller retail ICO investors that exhibit naïve reinforcement learning behaviour.

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“…Usually, the sale process serves to finance an underlying blockchain project (Conley 2017). ICOs became a popular alternative to traditional financing methods for organizations (Bachmann et al 2019;Boreiko and Sahdev 2018;Fridgen et al 2018;Li and Mann 2018;Schweizer et al 2017).…”

Section: Blockchain and Token Economymentioning

confidence: 99%

The token’s secret: the two-faced financial incentive of the token economy

et al. 2020

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Multi-sided platforms are omnipresent in today's digital world. However, establishing a platform includes challenges: The platform utility usually increases with the number of participants. At an early stage, potential participants expect the platform utility to be low and lack an incentive to join (i.e., "chicken and egg" problem). Blockchain-enabled utility tokens hold the promise to overcome this problem. They supposedly provide a suitable financial incentive for their owners to join the platform as soon as possible. In the first half of 2018, investors seemed to believe in the presumption and spent more than US$ 17.6 billion in token sales. To date, we know little about this financial incentive in the context of the token economy. For this purpose, we model the token value development and the associated incentives in a multi-sided blockchain-enabled platform. The resulting findings suggest that blockchain-enabled utility tokens can help to overcome the "chicken and egg" problem. However, these tokens lead to contradictory incentives for platform participants, and can even inhibit platform usage. The contribution of our work is twofold: First, we develop one of the first models for token value development. Second, our research contributes to a deeper understanding of the utility token's financial incentive.

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Initial Coin Offering and Platform Building

Cited by 169 publications

References 60 publications

The Economics of Digital Token Cross-Listings

The Economics of Digital Token Cross-Listings

Serial and large investors in initial coin offerings

The token’s secret: the two-faced financial incentive of the token economy

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