Digital Tokens and Platform Building

Jiasun Li and William Mann

The Review of Financial Studies, 2025, vol. 38, issue 7, 1921-1954

Abstract: We present a model rationalizing the economic value of digital tokens for launching peer-to-peer platforms. By using the blockchain to transparently distribute tokens before the platform launches, a token sale overcomes later coordination failures between the platform’s users. This result follows from forward induction reasoning, under which the costly and observable action of token acquisition credibly communicates the intent to participate on the platform. Our framework demonstrates the applications of digital tokens to entrepreneurship, and offers guidance for both practitioners and regulators.

Keywords: C72; C73; L26; D85; G23 (search for similar items in EconPapers)
Date: 2025
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