Authors
Ioanid Roşu, Fahad Saleh
Publication date
2021
Journal
Management Science
Volume
67
Issue
2
Pages
661-672
Publisher
INFORMS
Description
Do the rich always get richer by investing in a cryptocurrency for which new coins are issued according to a proof-of-stake (PoS) protocol? We answer this question in the negative: Without trading, the investor shares in the cryptocurrency are martingales that converge to a well-defined limiting distribution and, hence, are stable in the long run. This result is robust to allowing trading when investors are risk neutral. Then, investors have no incentive to accumulate coins and gamble on the PoS protocol but weakly prefer not to trade.
This paper was accepted by Kay Giesecke, finance.
Total citations
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