Decentralization and Platform Usage: Evidence from Decentralized Exchange Platforms
Journal
Strategic Management Society Annual Conference
Type
conference paper
Date Issued
2024
Author(s)
Abstract
Digital platforms have gained significant prominence in recent years. Often, the orchestra-tors of such platforms are centralized organizations that have significant power over com-plementors and users, which creates the risk that this power may be misused. In this paper, we study decentralization, an alternative platform governance model that might mitigate such risks by reducing the concentration of power, and analyze whether decentralization is valued by users. Specifically, using the collapse of a centralized platform for digital currency exchange as an exogenous shock, we study if increased awareness of centralization-related risks can positively affect the usage of decentralized platforms. Preliminary evidence sug-gests that users value decentralization per se, while the exact degree of decentralization may be less relevant in driving usage.