Market vs the Public: Blockchain Token Valuation, Social Media, and Open Source Community


Student thesis: Doctoral Thesis

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Award date14 Sep 2022


Blockchain, a novel decentralized distributed ledger, has attracted increasing attention in academics and industries. With the development of blockchain, capital is rushing into the market of cryptocurrencies, which are tokens issued based on the blockchain. This thesis involves different groups of people, including token investors from a commercial perspective and blockchain developers from a technical perspective. In this thesis, the marketing effect of social media in the initial fundraising stage of cryptocurrency investment as well as the impact of token fluctuation on the activities of blockchain developers in the open-source community after being listed on exchanges are explored.

The first essay, "Social Media and ICO," investigates the marketing effect of social media on initial coin offering (ICO) success. ICO has become a popular financing approach to blockchain-related projects. However, ICO initiators face significant challenges in attracting the attention of investors systematically. ICO initiators have limited ways of informing potential investors of project-related information. Owing to the lack of information, it is difficult for investors to evaluate the value of ICO projects. Although previous research showed that social media could assist firms in disseminating information and interacting with customers, few studies have examined how organizations can actively operationalize their social media accounts to enhance their financial performance. Specifically, I analyze a unique dataset containing thousands of ICO projects and their firms' social media activities. The study reveals that only creating an official social media account does not help achieve ICO success, and the activeness on social media has an inverted U-shaped relationship with fundraising performance.

The second essay, "Token price and Open Source Development," examines the impact of the token price fluctuation on different types of developers in open-source communities. Open source software (OSS) is a common approach in which developers voluntarily contribute to building systems. Owing to the openness of the source code and project progress, OSS has higher transparency and trust. Thus, blockchain projects often adopt this approach for their development. Moreover, the unique characteristics of tokens make token price a special factor affecting OSS developers. Although the token price was designed to signal the market's valuation of the blockchain project, it could change the interests of peripheral developers and the motivation of core developers that may hold tokens. In this study, I develop a dataset on blockchain development activities on GitHub. The empirical results indicate that the token price fluctuations could significantly affect the participation, efforts, and success of developers. Moreover, I establish that the influence is negatively moderated by the project age. Additionally, I find that price has different impacts on core and peripheral developers: the effect of price on the participation and efforts of developers is larger for the peripheral developers, whereas that on the success of developers is larger for the core developers.

This thesis makes various theoretical and practical contributions to the literature. First, it extends the use of social media from the general financial field to the context of the ICO market, and it has some novel findings. For instance, only having a social media account does not boost the financial success of projects in the ICO. Moreover, moderate updates benefit fundraising performance, whereas over frequent updates have a detrimental impact. These findings provide unique and important implications for practices regarding firm social media actions for the success of ICO financing. Second, it extends the current understanding of the motivations of open-source developers and introduces token price fluctuations as a new mechanism in the context of emerging blockchains for both the core and peripheral developers. This thesis also provides practical contributions to open-source project management.

    Research areas

  • Blockchain, Cryptocurrency, Social Media, Initial Coin Offering (ICO), Open Source Software (OSS)