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Token Financing vs. Equity and Crowdfunding

Author

Listed:
  • Edmond Baranès

    (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)

  • Ulrich Hege

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Jin-Hyuk Kim

    (University of Colorado [Boulder])

Abstract

We present a stylized model of three entrepreneurial financing methods based on two tradeoffs. First, token financing and crowdfunding reveal consumer-investors' demand for the product prior to investment, but upfront purchase weakens the entrepreneur's incentive to deliver. Second, token financing permits a bubble component in token value, but reduces consumer surplus.

Suggested Citation

  • Edmond Baranès & Ulrich Hege & Jin-Hyuk Kim, 2026. "Token Financing vs. Equity and Crowdfunding," Post-Print hal-05578939, HAL.
    • Handle: RePEc:hal:journl:hal-05578939
    DOI: 10.1016/j.econlet.2026.112964
    Note: View the original document on HAL open archive server: https://hal.science/hal-05578939v1
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    References listed on IDEAS

    as
    1. Kogana, Shimon & Makarov, Igor & Niessnerc, Marina & Schoar, Antoinette, 2024. "Are cryptos different? Evidence from retail trading," LSE Research Online Documents on Economics 122266, London School of Economics and Political Science, LSE Library.
    2. Kogan, Shimon & Makarov, Igor & Niessner, Marina & Schoar, Antoinette, 2024. "Are cryptos different? Evidence from retail trading," Journal of Financial Economics, Elsevier, vol. 159(C).
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