arXiv
Open Access
2024
Token vs Equity for Startup Financing
Guangye Cao
Abstrak
Why would a blockchain-based startup and its venture capital investors choose to finance by issuing tokens instead of equity? What would be their rates of return for each asset? This paper focuses on the liquidity difference between the two fundraising methods. I build a three-period model of an entrepreneur, two types of investors, and users. Some investors have unforeseen liquidity needs in the middle period that can only be met with tokens. The entrepreneur obtains higher payoff by issuing tokens instead of equity, and the payoff difference increases with investors risk-aversion and need for liquidity in the middle period, as well as the depth of the token market.
Topik & Kata Kunci
Penulis (1)
G
Guangye Cao
Akses Cepat
Informasi Jurnal
- Tahun Terbit
- 2024
- Bahasa
- en
- Sumber Database
- arXiv
- Akses
- Open Access ✓