Utility Tokens

22 Pages Posted: 29 Apr 2022

See all articles by Hugo Benedetti

Hugo Benedetti

ESE Business School - Universidad de los Andes, Chile

Luis Abarzúa

affiliation not provided to SSRN

Christian Caceres Fuentes

Universidad Central de Chile

Date Written: December 15, 2021

Abstract

Utility tokens are digital currencies that serve as the only accepted means of payment for services and products provided through a blockchain-based platform. They finance the development of their product or service, reward and incentivize early adopters and network promoters, align economic incentives between supply, demand, and the marketplace, and enhance network effects among all participants. Their tokenomic design consists of the rules and regulations governing a token’s issuance, distribution, allocation, and potential destruction. The chapter describes utility tokens, compares them with other types of cryptoassets, and discusses their value creation process and role in network economics. It also reviews common tokenomic designs, discusses different regulatory approaches, and provides examples of current utility token applications in decentralized applications such as decentralized finance (DeFi) and virtual reality platforms (metaverses).

Keywords: Utility tokens, network effects, tokenomics, decentralized finance, metaverse.

JEL Classification: G10,G20, G30, M13,M30

Suggested Citation

Benedetti, Hugo E and Abarzúa, Luis and Caceres Fuentes, Christian, Utility Tokens (December 15, 2021). Available at SSRN: https://ssrn.com/abstract=4088568 or http://dx.doi.org/10.2139/ssrn.4088568

Hugo E Benedetti (Contact Author)

ESE Business School - Universidad de los Andes, Chile ( email )

Av. La Plaza 1905
San Carlos de Apoquindo, Las Condes
Santiago
Chile

Luis Abarzúa

affiliation not provided to SSRN

Christian Caceres Fuentes

Universidad Central de Chile ( email )

Santiago, 0405
Chile

HOME PAGE: http://https://www.linkedin.com/in/ccaceres/

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