The Tokenomics of Staking

Lin Cong, Zhiheng He and Ke Tang

No 33640, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Tokens offer convenience in digital networks and earn rewards when staked for consensus generation or economic activities. In our continuous-time model, agents dynamically allocate wealth over on-platform transactions and staking. Aggregate staking ratio crucially shapes platform productivity, grows userbase, and links staking to endogenous reward rates and price dynamics. Transaction fees, token issuance, and user heterogeneity all affect platform lifecycle. Empirical findings support the theoretical predictions: (i) correlation between staking ratio and reward rate is cross-sectionally positive, but time-series-wise negative; (ii) staking ratios positively predict excess returns; (iii) the convenience wedge generates UIP violations and significant crypto carry premia.

JEL-codes: C73 E42 F43 L86 (search for similar items in EconPapers)
Date: 2025-04
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