Behavioral Tokenomics: Consumer Perceptions of Cryptocurrency Token Design

Abstract

Cryptocurrency token economics (or “tokenomics”) are taking an increasing role in the development and marketing of cryptocurrency and blockchain products and are being incorporated into the products and services that are not necessarily “crypto-native.” While token creators have several design features that they can utilize to improve the attractiveness of a product’s token, little research has examined user preferences for certain token designs. In six studies, I examine consumer perceptions of different common token attributes—staking yields, token inflation, yield source, yield type, and lockup periods. In general, changing these tokenomic levers has little to no effect on token attractiveness in separate evaluation (when participants see only one token at a time), although they can matter in joint evaluation (when they see multiple tokens listed together). Importantly, however, none of these attributes matters as much as a token’s prior price performance. People prefer tokens that have recently gone up in price over all else. As a result, token designers who wish to maximize the attractiveness of their products’ tokens should prioritize designs that accrue value to individual tokens, rather than designs that may provide value to holders in other ways but may lower the nominal value of the token itself.