Are you in Paris this January 22? The Kaiko Team invites you to attend our inaugural Meetup at our new offices in the heart of Paris. Stop by the Kaiko offices to hear two esteemed academics present their research on blockchain forks and cryptocurrency valuation models.
The first presentation will be given by Christophe Bisière, a professor of finance at Toulouse Capitole University. He will be discussing his research on the generation and implications of blockchain forks. The second presentation will be given by Julien Prat, an associate professor in economics at the École Nationale de la Statistique et de l’Administration. He will be presenting his research on the fundamental pricing of utility tokens.
The schedule is as follows:
-18:15 — Christophe Bisière — Blockchain Forks and Strategic Miners
-18:45 — Julien Prat — Utility Token Valuation Models
-19:15 — Question and Answer Session
-19:30 — Mingle and Network
Register for the free Meetup here: https://www.meetup.com/Kaiko-Paris-Cryptocurrency-and-Blockchain-Meetup/events/257921835/
We model the proof-of-work blockchain protocol as a stochastic game and analyse the equilibrium strategies of rational, strategic miners. Mining the longest chain is a Markov perfect equilibrium, without forking, in line with Nakamoto (2008). The blockchain protocol, however, is a coordination game, with multiple equilibria. There exist equilibria with forks, leading to orphaned blocks and persistent divergence between chains. We also show how forks can be generated by information delays and software upgrades. Last we identify negative externalities implying that equilibrium investment in computing capacity is excessive.
We explain how to evaluate the fundamental price of utility tokens. Our model endogenize the velocity of circulation of tokens and yields a pricing formula that is fully microfounded. According to our approach, tokens are valuable because they have to be immediately accessible when the platform service is needed, a requirement that is reminiscent of the cash-in-advance constraint in the theory of money.