All Sizzle and No Steak? Analyzing the Value of ERC20 Tokens via A Portfolio Model

The Ethereum ecosystem has undergone rapid growth in recent years, solidifying its position as a leading programmable blockchain platform. Its open nature has nurtured a vibrant marketplace for token issuance and trading. The introduction of the ERC20 token standard has greatly diversified token transactions, leading to increased circulation and adoption. Despite ERC20 tokens being widely used, there has been little research on their true value, leaving financial risks unclear. To fill the gap, in this paper, we propose a mathematical model for assessing the value of ERC20 assets. Our model combines existing credible assets, both physical and crypto-based, with ERC20 tokens to form a portfolio. Based on the portfolio, we calculate token prices and analyze the contribution ratios of various sources. To validate the effectiveness of our model, we further conduct an empirical study using raw transaction data gathered from on-chain sources. Our analysis demonstrates that assets such as the US dollar, Ethereum, and Bitcoin significantly influence token prices and play key roles in shaping the overall value composition of many ERC20 tokens.