Fundamental Pricing of Utility Tokens

49 Pages Posted: 15 Apr 2024 Last revised: 12 Feb 2025

See all articles by Julien Prat

Julien Prat

University of Vienna; IZA Institute of Labor Economics

Vincent Danos

affiliation not provided to SSRN

Stefania Marcassa

CY Cergy Paris Université

Date Written: July 28, 2024

Abstract

We propose a framework for the fundamental valuation of utility tokens. We introduce a requirement that is reminiscent of the cash-in-advance constraint, stipulating that services have to be accessed immediately. Our model endogenizes the velocity of token circulation, yielding a microfounded pricing formula that we calibrate using Ethereum’s adoption data. The equilibrium price path goes through two successive phases: Initially, a portion of the tokens are held for purely speculative motives, and later on, all tokens are held with the intention of being used.

Keywords: Asset pricing, utility token, Blockchain, cryptocurrency, ICOs, platform

JEL Classification: E42, G12, G24

Suggested Citation

Prat, Julien and Danos, Vincent and Marcassa, Stefania, Fundamental Pricing of Utility Tokens (July 28, 2024). Management Science, https://doi.org/10.1287/mnsc.2023.00566

, Available at SSRN: https://ssrn.com/abstract=4771372 or http://dx.doi.org/10.2139/ssrn.4771372

Julien Prat (Contact Author)

University of Vienna ( email )

Bruenner Strasse 72
Vienna 1210, Vienna
Austria

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Vincent Danos

affiliation not provided to SSRN

Stefania Marcassa

CY Cergy Paris Université ( email )

33 boulevard du Port
Cergy, Cergy Pontoise Cedex 95011
France

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
219
Abstract Views
527
Rank
287,337
PlumX Metrics