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Abstract
This paper employs the Pareto distribution to model participants’ transaction types in the dynamic digital platform adoption and valuation theory. By closed-form solutions, we derive the analytical condition determining whether the tokenized economy exhibits faster adoption than the numeraire economy. We generalize the conclusion of Cong et al. (2021) that the user adoption is faster in the tokenized economy than in the numeraire economy because of endogenous appreciation expectation based on their numerical analysis. Conversely, when the volatility effect of platform productivity outweighs the growth effect, the adoption rate of the tokenized platform is slower due to depreciation expectation.
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