On the performance of blockchain-based token offerings

Marten Risius (), Christoph F. Breidbach (), Mathieu Chanson (), Ruben Krannichfeldt () and Felix Wortmann ()
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Marten Risius: The University of Queensland
Christoph F. Breidbach: The University of Queensland
Mathieu Chanson: ETH Zurich
Ruben Krannichfeldt: University of St. Gallen
Felix Wortmann: University of St. Gallen

Electronic Markets, 2023, vol. 33, issue 1, No 32, 19 pages

Abstract: Abstract Initial coin offerings (ICOs) and initial exchange offerings (IEOs) are distinct blockchain-based token offerings. Following multiple frauds associated with decentralized and unregulated ICOs, IEOs are emerging as a novel pathway that relies on centralized crypto exchange platforms acting as intermediaries. However, the question as to how this shift affects fundraising processes in what has traditionally been a decentralized environment remains unresolved. We here address this issue by empirically comparing the performance of ICOs and IEOs through the lens of signaling theory, focusing specifically on the impact of social media information across 305 token offerings (ICOs and IEOs). Our work introduces IEOs and explains how and why the volume and sentiment of social media signals may serve as predictors of fundraising performance. We furthermore find that the impact of these electronic word-of-mouth (eWOM) media signals is reduced in the case of IEOs—in the presence of a central cryptocurrency exchange platform mediator. We delineate implications for investors, ventures, platform providers, and regulators alike.

Keywords: Initial exchange offering (IEO); Initial coin offering (ICO); Blockchain; Electronic word-of-mouth (eWOM); Social media signals; Cryptocurrency exchange platforms (search for similar items in EconPapers)
JEL-codes: A1 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s12525-023-00652-5

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