Token-Based Platform Finance

50 Pages Posted: 29 Oct 2019 Last revised: 4 Sep 2020

See all articles by Lin William Cong

Lin William Cong

Cornell University - Samuel Curtis Johnson Graduate School of Management

Ye Li

Ohio State University

Neng Wang

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 4, 2020


We develop a dynamic model of platform economy where tokens derive value by facilitating transactions among users and the platform conducts optimal token-supply policy. Token supply increases when new tokens are issued to finance platform growth and to reward platform owners. Token supply decreases when the platform buys back tokens to boost the franchise value (seigniorage). Although token price is endogenously determined in a liquid market, the platform's financial constraint generates an endogenous token issuance cost that causes under-investment and conflicts of interest between insiders (owners) and outsiders (users). Blockchain technology improves efficiency by enabling commitment to predetermined rules of token supply that address the platform owners' time inconsistency and thereby mitigates under-investment.

Keywords: Blockchain, Cryptocurrency, Dynamic Corporate Financing, Durable Goods, Gig Economy, Stablecoin, Token/Coin Offering, Optimal Token Supply

Suggested Citation

Cong, Lin and Li, Ye and Wang, Neng, Token-Based Platform Finance (September 4, 2020). Fisher College of Business Working Paper No. 2019-03-028, Charles A. Dice Center Working Paper No. 2019-28, Columbia Business School Research Paper Forthcoming, Available at SSRN: or

Lin Cong

Cornell University - Samuel Curtis Johnson Graduate School of Management ( email )

Ithaca, NY 14853
United States


Ye Li (Contact Author)

Ohio State University ( email )

Fisher Hall 836, 2100 Neil Ave
Columbus, OH 43210
United States


Neng Wang

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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