TY - JOUR
T1 - Financing decentralized digital platform growth
T2 - The role of crypto funds in blockchain-based startups
AU - Cumming, Douglas
AU - Drobetz, Wolfgang
AU - Momtaz, Paul P.
AU - Schermann, Niclas
N1 - Publisher Copyright:
© 2024 The Authors
PY - 2025/1
Y1 - 2025/1
N2 - Coordination frictions prevent the efficient adoption and governance of blockchain-based platforms. Crypto funds (CFs) create value by smoothing frictions on decentralized digital platforms (DDPs). CF-backed DDPs obtain higher valuations in the primary token market, outperform their peers after issuing tokens, and benefit from token price appreciation around CF investment disclosure in the secondary market. Primary transaction data from the Ethereum ledger shows that the valuations of DDPs with meager adoption and a higher centralization of token ownership benefit more from CF backing. The positive valuation and performance effects for CF-backed DDPs are more pronounced for CFs that are more central in investor networks.
AB - Coordination frictions prevent the efficient adoption and governance of blockchain-based platforms. Crypto funds (CFs) create value by smoothing frictions on decentralized digital platforms (DDPs). CF-backed DDPs obtain higher valuations in the primary token market, outperform their peers after issuing tokens, and benefit from token price appreciation around CF investment disclosure in the secondary market. Primary transaction data from the Ethereum ledger shows that the valuations of DDPs with meager adoption and a higher centralization of token ownership benefit more from CF backing. The positive valuation and performance effects for CF-backed DDPs are more pronounced for CFs that are more central in investor networks.
KW - Blockchain-based crowdfunding
KW - Crypto funds (CFs)
KW - Decentralized finance (DeFi)
KW - Digital platform adoption and governance
KW - Initial coin offering (ICO)
UR - http://www.scopus.com/inward/record.url?scp=85204357246&partnerID=8YFLogxK
U2 - 10.1016/j.jbusvent.2024.106450
DO - 10.1016/j.jbusvent.2024.106450
M3 - Article
AN - SCOPUS:85204357246
SN - 0883-9026
VL - 40
JO - Journal of Business Venturing
JF - Journal of Business Venturing
IS - 1
M1 - 106450
ER -