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Fundamental Pricing of Utility Tokens

Author

Listed:
  • Julien Prat

    (CNRS - Centre National de la Recherche Scientifique)

  • Vincent Danos

    (CNRS - Centre National de la Recherche Scientifique)

  • Stefania Marcassa

    (THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université)

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.

Suggested Citation

  • Julien Prat & Vincent Danos & Stefania Marcassa, 2025. "Fundamental Pricing of Utility Tokens," Post-Print hal-04956178, HAL.
    • Handle: RePEc:hal:journl:hal-04956178
    DOI: 10.1287/mnsc.2023.00566
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    Cited by:

    1. Aggelos Kiayias & Philip Lazos & Jan Christoph Schlegel, 2023. "Would Friedman Burn your Tokens?," Papers 2306.17025, arXiv.org.
    2. Yukun Liu & Aleh Tsyvinski & Xi Wu, 2022. "Common Risk Factors in Cryptocurrency," Journal of Finance, American Finance Association, vol. 77(2), pages 1133-1177, April.
    3. Ye Li & Simon Mayer & Simon Mayer, 2021. "Money Creation in Decentralized Finance: A Dynamic Model of Stablecoin and Crypto Shadow Banking," CESifo Working Paper Series 9260, CESifo.
    4. Schilling, Linda, 2021. "ICO versus Credit versus Venture Capital Financing under Stochastic Demand: A comment on '`Entrepreneurial Incentives and the Role of Initial Coin Offerings'' by R. Garratt and M. v. Oordt," MPRA Paper 116492, University Library of Munich, Germany.
    5. Andrea Canidio, 2023. "Auctions with Tokens: Monetary Policy as a Mechanism Design Choice," Papers 2301.13794, arXiv.org, revised Jun 2025.
    6. Arkorful, Gideon Bruce & Chen, Haiqiang & Gu, Ming & Liu, Xiaoqun, 2023. "What can we learn from the convenience yield of Bitcoin? Evidence from the COVID-19 crisis," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 141-153.
    7. Schilling, Linda & Fernández-Villaverde, Jesús & Uhlig, Harald, 2024. "Central bank digital currency: When price and bank stability collide," Journal of Monetary Economics, Elsevier, vol. 145(C).
    8. Marcelo A. T. Aragão, 2021. "A Few Things You Wanted to Know about the Economics of CBDCs, but were Afraid to Model: a survey of what we can learn from who has done," Working Papers Series 554, Central Bank of Brazil, Research Department.

    More about this item

    Keywords

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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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