# Review of Blockchain Tokens Creation and Valuation
## 4 Valuation and Price Determinants
### Finance and Investments  
In finance and blockchain, the tokens are divided into security tokens (equity), utility tokens, and payment tokens (currency). Their main features are summarized in Table 5.  
[PERSON] et al. [50] investigated the factors determining the token value and split them into three categories: financial, technological, and ICO. The study found that the amount raised during the ICO is not affected by white paper availability or pre-sales. The key factors analyzed were open-source code availability and the preset hard capHolden et al. [31] introduce the concept of token velocity and token value as a relation dependent on the friction imposed by the underling platform. The authors present the idea of the ICO paradox by showing that assuming everything else remains constant, having too much \begin{table}
\begin{tabular}{c c c c} \hline \hline
**Methodology** & **Analysis Time Frame** & **Data** & **Price Influences** \\ \hline Type of asset & Digital Assets & Digital Assets & Digital or virtual asset \\ Issuance & STO & ICO & Mining or ICO \\ Investor rights & Profit, Payment rights & Revenue, Consumptive rights & Specific rights beyond the use of the currency for transactions \\ Purpose & Investment product for external capital & Supporting community-based ecosystems & Store of value \\ Legal status & Regulated securities & Sometimes- Regulated securities & Varies by jurisdiction \\ \hline \hline \end{tabular}
\end{table} 
Table 5: Security, utility, and payment tokens features. friction discourages sales while having very little friction increases the token velocity and the supply of tokens. It shows that equilibrium needs to be achieved by comparing it with a markup over-cost fee system. Since the utility tokens provide access to the final product, it gives the investor rights not only to part of the profit but of the revenue, resulting in the project covering all follow-up costs. To understand the blockchain token environment from a financing perspective it is necessary to differentiate the multitude of options, including the security tokens, which unlike utility tokens provide the investor with revenues, such as dividends that are part of the profit [51]. [PERSON] et al. [34] prove that capital is raised through token issuances due to the payment being carried out after transaction volume rather than while still under-provisioning profit. Others have shown that for the highly liquid tokens, their market capitalization remains small, limiting the amount of capital that can be raised by issuing utility tokens (the only accepted payment on the platform, that will not provide any control right or dividends) [31]. The security tokens provide the right to the investor to the platform profits, with the value of the token dependent on the platform sales. [PERSON] et al. [60] showed that the factors influencing the total funds raised are the information presented in white papers, issuance country, (US statistical significance with positive correlation, Asia negative), total token supply (positive correlation), pricing and bonus scheme positive impact on post-ICO, correlation with fiat value, and distribution of tokens between crowdfunding, advisors and ecosystem development. [PERSON] et al. [49], consider utility and equity tokens, with the latter issuance through STO, aiming to answer the viability of financing through asset tokenization. They noticed the advantages for both founders and investors, including high liquidity through secondary markets, however by having less strict regulations, there is a higher risk of portraying an unrealistic product and founders not fulfilling their promise once the ICO phase is complete. In 2018, under half of the projects remained active for under five months. Moreover, there is a risk of token hacks that investors must consider. [PERSON] et al. [20] analyses the behavior of ICO investors showing that they prefer selling the tokens on the secondary market, which has benefits both attracting new investors and liquidity.