License: Creative Commons Attribution 4.0 International license (CC BY 4.0)
When quoting this document, please refer to the following
DOI: 10.4230/OASIcs.Tokenomics.2021.8
URN: urn:nbn:de:0030-drops-159051
URL: http://dagstuhl.sunsite.rwth-aachen.de/volltexte/2022/15905/
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Lee, Michael Junho ; Martin, Antoine ; Townsend, Robert M.

Optimal Design of Tokenized Markets

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OASIcs-Tokenomics-2021-8.pdf (0.3 MB)

Abstract

Trades in today’s financial system are inherently subject to settlement uncertainty. This paper explores tokenization as a potential technological solution. A token system, by enabling programmability of assets, can be designed to eradicate settlement uncertainty. We study the allocations achieved in a decentralized market with either the legacy settlement system or a token system. Tokenization can improve efficiency in markets subject to a limited commitment problem. However, it also materially alters the information environment, which in turn aggravates a hold-up problem. This limits potential gains from resolving settlement uncertainty, particularly for markets that depend on intermediaries.

BibTeX - Entry

@InProceedings{lee_et_al:OASIcs.Tokenomics.2021.8,
  author =	{Lee, Michael Junho and Martin, Antoine and Townsend, Robert M.},
  title =	{{Optimal Design of Tokenized Markets}},
  booktitle =	{3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)},
  pages =	{8:1--8:1},
  series =	{Open Access Series in Informatics (OASIcs)},
  ISBN =	{978-3-95977-220-4},
  ISSN =	{2190-6807},
  year =	{2022},
  volume =	{97},
  editor =	{Gramoli, Vincent and Halaburda, Hanna and Pass, Rafael},
  publisher =	{Schloss Dagstuhl -- Leibniz-Zentrum f{\"u}r Informatik},
  address =	{Dagstuhl, Germany},
  URL =		{https://drops.dagstuhl.de/opus/volltexte/2022/15905},
  URN =		{urn:nbn:de:0030-drops-159051},
  doi =		{10.4230/OASIcs.Tokenomics.2021.8},
  annote =	{Keywords: Tokenization, programmability, settlement uncertainty, asymmetric information}
}

Keywords: Tokenization, programmability, settlement uncertainty, asymmetric information
Collection: 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021)
Issue Date: 2022
Date of publication: 18.03.2022

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