Token Financing vs. Equity and Crowdfunding

Edmond Baranès, Ulrich Hege and Jin-Hyuk Kim
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Edmond Baranès: MRE - Montpellier Recherche en Economie - UM - Université de Montpellier
Ulrich Hege: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Jin-Hyuk Kim: University of Colorado [Boulder]

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Abstract: We present a stylized model of three entrepreneurial financing methods based on two tradeoffs. First, token financing and crowdfunding reveal consumer-investors' demand for the product prior to investment, but upfront purchase weakens the entrepreneur's incentive to deliver. Second, token financing permits a bubble component in token value, but reduces consumer surplus.

Keywords: Utility token; Token regulation; Initial coin offering; Entrepreneurial financing; Crowdfunding; Financement participatif; Financement des entreprises; Offre initiale de jetons; Réglementation des jetons; Jeton utilitaire (search for similar items in EconPapers)
Date: 2026-03-30
New Economics Papers: this item is included in nep-ent, nep-mic and nep-pay
Note: View the original document on HAL open archive server: https://hal.science/hal-05578939v1
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Published in Economics Letters, 2026, pp.112964. ⟨10.1016/j.econlet.2026.112964⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05578939

DOI: 10.1016/j.econlet.2026.112964

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