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Session Chair: Jongsub Lee, Seoul National University Discussant: Hyun Soo Doh, Hanyang University
Location:9B318 (3rd basement floor, International Hall)
Presentations
Optimal Staking and Liquid Token Holding Decisions in Cryptocurrency Markets
Kyoung Jin Choi1, Junkee Jeon2, Minsuk Kwak3, Byung Hwa Lim4
1University of Calgary, Canada; 2Kyung Hee University, Korea, Republic of (South Korea); 3Hankuk University of Foreign Studies, Korea, Republic of (South Korea); 4Sungkyunkwan University, Korea, Republic of (South Korea)
We explore an optimal token holding and staking problem for cryptocurrency investors. Our investigation revolves around understanding the tradeoff between staking rewards and the consequent illiquidity that emerges from the distinct structure of blockchain platforms or Decentralized Autonomous Organizations (DAOs). We present comprehensive analytic solutions, which enable us to examine the novel implications stemming from the staking mechanism for trading and staking policies and the dynamics of risk-taking behaviors. Our model provides the insights distinguishing between token investments with staking rewards and conventional investment avenues, such as stocks and commodities.
