Rudd Family Professor of Management & Associate Professor of Finance at the Johnson Graduate School of Management at Cornell University (USA)

Dynamic Incentives and Financial Inclusion ​in Web3


Web3 and DeFi are widely advocated as innovations for greater financial inclusion and democratization. We conduct an initial investigation using data from the Ethereum network. We provide detailed analyses of the ecosystem and its main participants in terms of transaction volume, network structure, and mining and ownership distributions. While mining concentration is moderate, Ether ownership is concentrated in exchanges and a small set of individuals. Concerning usage and transactions, we observe a shift from peer-to-peer interactions to user interactions with DApps, and much more transactions by large players in the system. Moreover, we document high transaction-fee ratios for small players, significant fluctuation of gas prices due to congestion, high transaction failure rates using DeFi, and high return volatility for tokens on the Ethereum platform. While users can reserve extra Ether under the gas limit policy to reduce transaction failures and gas-related parameters can be adjusted, these issues present particular challenges for small and new agents in the network under both the original protocol and EIP-1559. Through burning base fees, EIP-1559 partially mitigates these issues through redistribution. Time permitting, I will also discuss adding dynamic incentives to blockchain design.

Short Biography

Lin William Cong is the Rudd Family Professor of Management and Associate Professor of Finance at the Johnson Graduate School of Management at Cornell University, where he is the founding faculty director for the FinTech Initiative. He is also a Kauffman Foundation Junior Faculty Fellow, Poets & Quants World Best Business School Professor, and editorial board member for top business and finance journals such as the Management Science. Prior to joining Cornell, he was an assistant professor of Finance at the University of Chicago Booth School of Business where he created courses on “Quantimental Investment,” faculty member at the Center for East Asian Studies, doctoral fellow at the Stanford Institute for Innovation in Developing Economies, and George Shultz Scholar at the Stanford Institute for Economic Policy Research. He advised companies such as String Lab/Dfinity, DataYes, and is currently advising ChainLink, Blackrock, among other industry leaders in FinTech and asset management.

Professor Cong’s research spans financial economics, information economics, FinTech and AI, and Entrepreneurship (theory and intersection with digitization and development). Widely recognized as a founding scholar for FinTech research, Professor Cong has received numerous accolades such as the AAM-CAMRI-CFA Institute Prize in Asset Management, the CME Best paper Award, Finance Theory Group Best Paper Award, and has also been invited to speak or teach at hundreds of world-renowned universities, venture funds, investment and trading shops, and government agencies such as IMF, Asset Management Association of China, Alibaba, SEC, and federal reserve banks. He received his Ph.D. in Finance and MS in Statistics from Stanford University, and A.M. in Physics jointly with A.B. in Math and Physics from Harvard University.