Recently, the National Natural Science Foundation of China (NSFC) finalized a list of projects approved for its Young Student Basic Research Program (for Ph.D. students). Ph.D. student He Zhiheng (supervised by Professor Tang Ke) from the Institute of Economics, School of Social Sciences, Tsinghua University was granted a project.
The project is entitled "Loyalty Tokens in the Age of Digital Finance: Micro-mechanisms, Platform Construction and Regulation". Loyalty programs can be considered a business model that binds product consumption with the stake in future exchange for service products, in which case the proof-of-stake is an loyalty asset, or a loyalty token. The project focuses on frontier issues concerning digital finance-driven business model development and innovation. From a new perspective of tokenomics, it explores the economic significance of loyalty programs, studies basic economic theories behind loyalty tokens, analyzes technology-induced innovations in token functions and microeconomic mechanisms, and examines the consequent risks and regulatory problems. In particular, technologies such as blockchain provide liquidity and machine trust for loyalty tokens. Liquidity brings premium on token resale stake, eliminating the token accumulation process while being able to increase token prices, and bringing two opposing forces to the advance benefits created by product prepayment. Moreover, the circulation of loyalty stake brings positive externalities to casual consumers. And whether a secondary market for loyalty can reduce the liquidity risk of platforms due to demand shocks and smooth user consumption is also what the project will explore in depth. The project will discuss the heterogeneous corporate decisions as a result of the abovementioned factors, and explore the goals of introducing technologies to optimize loyalty token design and suggestions for regulation.
He Zhiheng is a Ph.D. student from the Institute of Economics, School of Social Sciences, Tsinghua University, under the supervision of Professor Tang Ke. He is mainly engaged in the theoretical and empirical research on fintech and digital economy. During his Ph.D. studies, He Zhiheng has published academic papers as the first author in domestic and foreign journals including China Economic Quarterly. His academic achievements have won awards such as the Best Paper Award at the Chinese Finance Annual Meeting (CFAM) and the Best Paper Award at the Asia Pacific Association of Derivatives (APAD) Annual Meeting, and were presented at a dozen of high-level international symposiums such as ABFER and CICF. He also visited Cornell University and the University of Hong Kong.
It is learned that the NSFC Young Student Basic Research Program (for Ph.D. students) was first piloted in 2023. To further implement the new concepts, deployments and measures proposed by General Secretary Xi Jinping on talent cultivation in the new era, and meeting the requirements of coordinated development of education, science & technology and talent cultivation, the program seeks to select a cohort of outstanding Ph.D. students with great development potential and solid foundation in scientific research. Within the scope of funding provided by NSFC, these students are supported as project leaders to undertake scientific fund projects, conduct basic and interdisciplinary research in interested areas of research. In this way they are given more opportunities to take on major roles, thus laying a solid foundation for building a high-level basic research talent team. The program adopts a "recommendation+ review" model, and finally determines funded projects by selecting the best of the best through students' individual application, school selection and recommendation, NSFC's communication review, and conference review.
