Robust adoption and valuation in tokenomics

Abstract

This paper incorporates model uncertainty into the dynamic token-based platform adoption and valuation theory. We find that ambiguity slows down the tokenized platform adoption since users with the belief distortion tend to prevent the perturbation of the platform productivity, thus weakening the appreciation of the expected token price and the decline of the token carry cost due to the user-base growth. Moreover, as concerns regarding model uncertainty induce a trade-off between token price appreciation expectation and ambiguity hesitation, comparing the adoption speeds in the robust tokenized economy and the tokenless economy depends on the severity of the ambiguity aversion. Finally, ambiguity amplifies the user-base volatility of the tokenized economy, which, however, is still lower than that of the tokenless economy.