IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v100y2026ics1544612326005325.html

Valuation of proof-of-stake and smart contract cryptocurrencies

Author

Listed:
  • Dong, Huayuan
  • Weber, Marko Hans
  • Xiao, Yao

Abstract

This paper develops a continuous-time equilibrium model to analyze the valuation of proof-of-stake (PoS) cryptocurrencies. A representative agent optimizes consumption and investment in the native PoS token, which features staking rewards and token burns linked to on-chain activity. The agent participates in an on-chain borrowing/lending market (e.g., stablecoin-based). We derive endogenous interest rates and token prices, showing that higher impatience and risk aversion decrease token value, while increased DeFi yields and expected revenue growth raise it. Counterintuitively, greater expected revenue growth increases the token inflation rate due to its upward pressure on token prices. The total market capitalization remains independent of the validator revenue distribution and the token issuance.

Suggested Citation

  • Dong, Huayuan & Weber, Marko Hans & Xiao, Yao, 2026. "Valuation of proof-of-stake and smart contract cryptocurrencies," Finance Research Letters, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:finlet:v:100:y:2026:i:c:s1544612326005325
    DOI: 10.1016/j.frl.2026.110003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612326005325
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2026.110003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:100:y:2026:i:c:s1544612326005325. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.