Valuation of Loyalty Tokens

18 Pages Posted: 15 Feb 2022 Last revised: 22 Feb 2022

See all articles by Anand Shah

Anand Shah

Tata Consultancy Services Ltd.

Date Written: February 1, 2022

Abstract

Valuation of tokens is a wager on the platform adoption. This study investigates the effect of platform adoption on the valuation of loyalty tokens and the contingent claims with the token as an underlying. The platform adoption is modelled using the classical Bass Model. The example selected is that of airmiles, but the approach could be extended to loyalty token with other numeraires as well. After assuming few monetary policy rules for the platform governance, the proposed simple model predicts that the Bass Model parameters could have significant influence on the valuation of loyalty tokens and the contingent claims with the token as an underlying.

Keywords: Tokenomics, Cryptocurrency, Initial Coin Offering (ICO), Blockchain applications, Bass Model, Option pricing with Bass Model parameters

JEL Classification: E42, G12, G13, L86

Suggested Citation

Shah, Anand, Valuation of Loyalty Tokens (February 1, 2022). Available at SSRN: https://ssrn.com/abstract=4023160 or http://dx.doi.org/10.2139/ssrn.4023160

Anand Shah (Contact Author)

Tata Consultancy Services Ltd. ( email )

TRDDC
54 B Hadapsar Industrial Estate
Pune, Maharashtra 411013
India
9767183938 (Phone)

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