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The Tokenomics of Staking

Author

Listed:
  • Lin William Cong
  • Zhiheng He
  • Ke Tang

Abstract

Tokens offer convenience in digital networks and earn rewards when staked for consensus generation or economic activities. In our continuous-time model, agents dynamically allocate wealth over on-platform transactions and staking. Aggregate staking ratio crucially shapes platform productivity, grows userbase, and links staking to endogenous reward rates and price dynamics. Transaction fees, token issuance, and user heterogeneity all affect platform lifecycle. Empirical findings support the theoretical predictions: (i) correlation between staking ratio and reward rate is cross-sectionally positive, but time-series-wise negative; (ii) staking ratios positively predict excess returns; (iii) the convenience wedge generates UIP violations and significant crypto carry premia.

Suggested Citation

  • Lin William Cong & Zhiheng He & Ke Tang, 2025. "The Tokenomics of Staking," NBER Working Papers 33640, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33640
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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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