HEC Research Papers Series,
HEC Paris

Abstract: This paper studies the financial policy of stablecoin issuers: how they are funded and how they distribute reserves. We document that issuers with similar business activities may adopt similar policies (MakerDAO and Aave) or very different ones (Tether and Circle). We rationalize this pattern with a model in which the return earned on reserves is a fundamental characteristic that differs between on-chain and off-chain issuers. The higher return available to off-chain issuers exacerbates agency frictions and, in turn, shapes optimal financial policy. We show that the resulting effect is non-monotone in observable outcomes: a higher return can lead to concentrated insider ownership and flexible, aggressive payouts, but it can also lead to dispersed equity ownership and rigid, conservative policies. We close with novel evidence that the implementation of on-chain buyback programs can create stability risks and temporary mispricing.

Keywords: Stablecoins; Decentralized Finance; Payout Policy; Buybacks; Agency Conflicts

JEL-codes: E42; G23; G32; G35

56 pages, October 9, 2026

Full text files

abstract=7587998 HTML file Full text

Download statistics

• HEC Paris
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to David Melon ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:ebg:heccah:1666This page generated on 2026-10-15 16:45:02.