The quest for trust in decentralised finance

Abstract

By building
on the role of trust in finance and screening theory, our research explores the
correlation between founders occupying leadership positions such as CEO, CTO,
or CFO and the funds raised through Initial Coin Offerings (ICOs). Our analysis
of data from 2,047 ICOs conducted between 2017 and 2021 reveals that founders
occupying positions of authority within their organisations are perceived by
investors as a signal of commitment. This perceived commitment enhances
investor trust in the venture, which, in turn, leads to increased funding
raised during the ICO. Furthermore, our analysis highlights the crucial role of
the CTO in building trust and investors’ preference for multiple founders
occupying leadership roles simultaneously. Our conclusions are robust to
potential biases and endogeneity.