Reference : Agent-based Model of Initial Token Allocations: Evaluating Wealth Concentration in Fa...

	Document type :	E-prints/Working papers : Already available on another site
	Discipline(s) :	Engineering, computing & technology : Multidisciplinary, general & others
	Focus Areas :	Computational Sciences
	To cite this reference:	http://hdl.handle.net/10993/51934

Title :	Agent-based Model of Initial Token Allocations: Evaluating Wealth Concentration in Fair Launches
Language :	English
Author, co-author :	Delgado Fernandez, Joaquin [University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX >]
	Barbereau, Tom Josua [University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX >]
	Papageorgiou, Orestis [University of Luxembourg > Interdisciplinary Centre for Security, Reliability and Trust (SNT) > FINATRAX >]
Publication date :	Aug-2022
Peer reviewed :	No
Abstract :	[en] With advancements in distributed ledger technologies and smart contracts, tokenized voting rights gained prominence within Decentralized Finance (DeFi). Voting rights tokens (aka. governance tokens) are fungible tokens that grant individual holders the right to vote upon the fate of a project. The motivation behind these tokens is to achieve decentral control. Because the initial allocations of these tokens is often un-democratic, the DeFi project Yearn Finance experimented with a fair launch allocation where no tokens are pre-mined and all participants have an equal opportunity to receive them. Regardless, research on voting rights tokens highlights the formation of oligarchies over time. The hypothesis is that the tokens' tradability is the cause of concentration. To examine this proposition, this paper uses an Agent-based Model to simulate and analyze the concentration of voting rights tokens post fair launch under different trading modalities. It serves to examine three distinct token allocation scenarios considered as fair. The results show that regardless of the allocation, concentration persistently occurs. It confirms the hypothesis that the disease is endogenous: the cause of concentration is the tokens tradablility. The findings inform theoretical understandings and practical implications for on-chain governance mediated by tokens.
Research centres :	Interdisciplinary Centre for Security, Reliability and Trust (SnT) > Digital Financial Services and Cross-organizational Digital Transformations (FINATRAX) ; University of Luxembourg: High Performance Computing - ULHPC
Funders :	Fonds National de la Recherche - FnR
Target :	Researchers
Permalink :	http://hdl.handle.net/10993/51934
DOI :	10.48550/arXiv.2208.10271
source URL :	https://arxiv.org/abs/2208.10271
FnR project :	FnR ; FNR13342933 > Gilbert Fridgen > DFS > Paypal-fnr Pearl Chair In Digital Financial Services > 01/01/2020 > 31/12/2024 > 2019

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