Essays on Cryptocurrency

Abstract

This dissertation consists of three essays. The first essay provides background on blockchain, cryptocurrency, and venture capital. It will explain the evolution of token distribution models, regulatory concerns, and the industry adoption of the technology. The second essay presents a model of startup financing that reflects regulatory concerns of the first essay. It develops a three-period model that compares token financing with traditional VC equity financing, where the key difference between the two is that tokens can be sold earlier than equity, which allows them to meet the liquidity needs of investors. The third essay combines token financial data and onchain transaction data from the Ethereum blockchain, to study the relationship between token liquidity, returns, and onchain market maker inventory.