https://macropaperwarehouse.com/authors/haotian-xiang/Haotian XiangHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/tokenomics-optimal-monetary-and-fee-policies/https://macropaperwarehouse.com/papers/tokenomics-optimal-monetary-and-fee-policies/<p>The rapid proliferation of cryptocurrency tokens—roughly 10,000 outstanding with a total market capitalization around $3 trillion as of early 2024—raises new questions about the design of token monetary policy and fee structures. This paper makes two contributions. Empirically, using supply histories for approximately 2,000 tokens, it documents three systematic patterns: average token money growth rates decline with age and stabilize at about 0.2% per month; long-run money growth rates and convergence speeds are positively correlated across tokens in the cross-section; and tokens more widely held by retail investors have relatively lower long-run money growth rates and convergence speeds. Theoretically, the paper derives optimal issuance and fee policies for a profit-maximizing issuer in a dynamic model where commitment matters, showing that a fully committed (Ramsey) issuer who maximizes profits after the initial period makes choices that maximize the total utility value of all tokens, that without any commitment no equilibrium with a positive token price exists unless fees are charged, and that under partial commitment issuers with higher commitment credibility optimally choose lower long-run money growth rates and fee ratios.</p>