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Assistant Professor of Finance, University of Chicago

Please visit my website at www.linwilliamcong.org

 
POSTS BY LIN CONG
  • Tokenomics: Dynamic Adoption and Valuation

    Lin Cong    Lin William Cong, Ye Li, Neng Wang
    07 Nov 2018
    1618
    15

    We provide a dynamic asset-pricing model of cryptocurrencies/tokens on platforms and highlight their roles on endogenous user adoption. Tokens facilitate transactions among decentralized users and allows them to capitalize future growth of promising platforms. Tokens thus can accelerate adoption, reduce user-base volatility, and improve welfare. Token price increases non-linearly in platform productivity, users’ heterogeneous transaction needs, and endogenous network size. The growth of user base starts slow, becomes explosive and volatile, and eventually tapers off. Our model can be extended to discuss platform token supply, cryptocurrency competition, and pricing assets under network externality.