Tokenomics: Optimal monetary and fee policies

We document properties of crypto monetary policies based on a large sample of tokens. We present a dynamic model to determine the optimal issuance and fee policies for issuers. Committing to low future money growth and fees increases profits, and the degree of commitment matters for equilibrium existence. A Ramsey issuer who maximizes profits, after the initial period, makes choices that maximize the utility value of all tokens. We present a model with probabilistic commitment, solve for the steady state in closed form, and show that empirically relevant long-run money growth rates align with very high levels of commitment. • Average money growth rates decline with age and stabilize at about 0.25% per month. • We derive optimal monetary issuance and fees for a crypto issuer. • Commitment significantly influences optimal policies and achievable market capitalization. • Empirically relevant money growth rates align with very high issuer commitment.