Token Economics Framework
17 Pages Posted: 29 May 2019
Date Written: Apr 8, 2019
Matching economic theories, the paper discusses the underlying fundamentals of token economics that exist within a token ecosystem. 3 design fundamentals that affect the soundness of token economics: 1) Market Design, 2) Mechanism Design and, 3) Token Design. Token ecosystems facilitate an exchange of goods and services between participants in the ecosystem. Concepts from matching theory, auction theory, monetary economics, allocation theory, network economics and game theory, can help better design strong incentives for participants, produce robust stable outcomes, reduce inefficient allocation and improve the efficiency of transaction within the ecosystem. This challenges existing systems that will open powerful potential for long-term sustainability of token ecosystems and overcoming existing challenges.
Keywords: Token Economics, Market Design, Mechanism Design, Token Design, Allocation Theory, Network Economics, Blockchain Economics
JEL Classification: O31, 033, 039, Y20
Suggested Citation: Suggested Citation