Initial Coin Offerings and Platform Building
日期: 2018-12-25


Jiasun Li is an assistant professor of finance at George Mason University. His current research interest is in blockchain technologies and FinTech applications. Dr. Li has presented his research at many prestigious institutions and conferences including MIT, NYU, Yale, National Bureau of Economic Research, Federal Reserve Bank, and the U.S. Securities and Exchange Commission. He is a winner of 2016 Yihong Xia Best paper award and 2014 Chicago Quantitative Alliance academic paper competition. He is also a frequent speaker for investment professionals. Dr. Li received his Ph.D in finance from UCLA Anderson School of Management and B.S. in mathematics from Fudan University (Shanghai, China) prior to joining George Mason.


In a typical initial coin offering (ICO), an entrepreneur pre-sells digital tokens which will later serve as the medium of exchange on a peer-to-peer platform. We present a model rationalizing ICOs for launching such platforms: By transparently distributing tokens before the platform operation begins, an ICO overcomes later coordination failures during platform operation, induced by a cross-side network effect between transaction counterparties. Furthermore, a critical-mass requirement that arises from an endogenous same-side network effect during the ICO rationalizes several empirical patterns observed in ICO structures. Our model provides guidance for both regulators and practitioners to discern economically valuable ICOs.