Blockchain-based Financing – More Efficient Capital Markets?
Blockchain-based financing allows companies of any size to raise capital. The phenomenon dates back to 2013 and has since then gained great attraction. Projects are able to tokenize any type of value (i.e. currencies, vouchers, equities etc.) and sell it to investors. The underlying blockchain technology enables immediate trading for any asset and trades can be settled in real-time.
While the potential of blockchain-based financing is great, the market is still very immature. Therefore, the Blockchain Research Lab launched a project to gain further understanding of the phenomenon.
Find below published research on the topic. By clicking on the picture, you can access the full text.
Blockchain-Based ICOs: Pure Hype or the Dawn of a New Era of Startup Financing?
JOURNAL OF RISK AND FINANCIAL MANAGEMENT • NOV 2018
This study explores the determinants of initial coin offering (ICO) success, where success is defined as the amount of capital a project could raise. ICOs are a tool for startups in the blockchain ecosystem to raise early capital with relative ease. The market for ICOs has grown at a rapid pace since its start in 2013. We analyze a unique dataset of 278 projects that finished their ICOs by August 2017 to assess determinants of funding success that we derive from the crowdfunding and venture capital literature. Our results show that ICOs exhibit similarities to classical crowdfunding and venture capital markets. Specifically, we identify resemblances in determinants of funding success regarding human capital characteristics, business model quality, project elaboration, and social media activity.
Cheap Signals in Security Token Offerings
BRL WORKING PAPER • FEB 2019
Blockchain-based security token offerings (STOs) provide a new way of crowdfunding and corporate financing. Building on signalling theory, this paper examines 1) whether companies conducting an STO make use of cheap signals to influence investment behaviour and 2) if such use of cheap signals is effective. We analyse a dataset of 151 STOs and identify that cheap signals of human capital and social media are used by projects and have a positive effect on funding success, while cheap signals of external network size negatively affect funding success. We argue that these signals can be exploited by STOs to influence investor behaviour raising concerns for investor protection.