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Andrea CANIDIO (INSEAD) – "Cryptotokens and cryptocurrencies: the extensive margin"

June 9, 2020 @ 12:15 pm - 1:30 pm
The Microeconometrics Seminar: Every Tuesday at 12:15 pm.
Time: 12:15 pm – 1:30 pm
Date: 9th of June 2020
Place: Room 3001
Andrea CANIDIO (INSEAD) – “Cryptotokens and cryptocurrencies: the extensive margin”

Abstract: Cryptotokens and cryptocurrencies can have positive value only if their supply is finite in every period. Blockchain technology can guarantee this property on the intensive margin, that is, for every specific cryptotoken or cryptocurrency. But the supply of cryptotokens and cryptocurrencies can be indefinitely expanded on the extensive margin, that is, by introducing new cryptotokens and cryptocurrencies similar or identical to the ones already existing. In this paper, I study the choice of entry and subsequent competitive dynamics among (at least two) developers, each of them working on a blockchain-based protocols financed via seigniorage: the creation of tokens that must be used in conjunction of the protocol (see Canidio 2018). Those tokens are first sold in an ICO and then traded on the market. I solve for the value of the winning protocol, the price of tokens associated with the competing protocols, and the equilibrium number of competing protocols (and associated tokens).


Xavier D’HAULTFOEUILLE (Laboratoire de Microéconométrie-CREST)
Benoît SCHMUTZ (Laboratoire de Microéconométrie-CREST)