"Financial incentives for open source development: the case of Blockchain"

Finally a research paper on a "hot" topic!  If you are interested in the financial side of blockchain (ICOs, cryptocurrencies, and so on), don't forget to check it out:


The point of the paper is to show that the way blockchain project are financed have an effect on the developers incentives to work hard. The exercise is to ignore everything else and see how these incentives determine the value of the protocol and the price of the token (see page 16, when I talk about the law of motion of the price). Of course, nobody should take this literally because there are so many other things that matter which are not in the model. Still, the paper has interesting results regarding when a team should hold an ICO (as late as possible), the stock of tokens that should stay with the dev team (as high as possible, contrary to the common "no central bank" creed), the potential value of different forms of vesitng. I think it is also relevant to investors, as they should be aware that there is nothing that prevent developers from offloading all their tokens and stop their work. In fact, this is supposed to happen "in the equilibrium of the model", that is, it is not a remote possibility at all!