Kickstarting blockchain: designing blockchain-based tokens for equity crowdfunding

Tobias Guggenberger (), Benjamin Schellinger (), Victor Wachter () and Nils Urbach ()
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Tobias Guggenberger: Branch Business & Information Systems Engineering of the Fraunhofer FIT
Benjamin Schellinger: Branch Business & Information Systems Engineering of the Fraunhofer FIT
Victor Wachter: University of Copenhagen
Nils Urbach: Branch Business & Information Systems Engineering of the Fraunhofer FIT

Electronic Commerce Research, 2024, vol. 24, issue 1, No 9, 239-273

Abstract: Abstract Blockchain-based tokens seek to overcome the friction and opaqueness of the legacy financial infrastructure in the company funding process, particularly in the early-stage and equity crowdfunding domain. While Initial Coin Offerings and Security Token Offerings proposed a solution for crowdfunding, early-stage companies still face challenges in using blockchain as an alternative equity funding infrastructure. In this context, the idea of blockchain-based equity tokens remains hypothetical. In addition, the literature lacks design theory for the development and implementation of blockchain-based equity tokens. This research bridges this gap by designing, developing, and evaluating an equity token prototype for crowdfunding, following the design science research approach. We propose a refined crowdfunding model and derive seven design principles that contribute to the design theory of equity tokens. The research results show that blockchain-based equity tokens improve efficiency, transparency, and interoperability while meeting regulatory requirements and facilitating secondary market trading.

Keywords: Blockchain; Design science; Equity crowdfunding; Initial coin offering; Security token offering; Tokens (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10660-022-09634-9

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