In today’s internet, there is clear incentive misalignment. Users who play the critical role of bootstrapping and sustaining networks are rarely compensated and have little say in product direction or company governance. Furthermore, employees are locked into unfavorable terms for their equity and private investors dominate startup cap tables.
Thought this was a pretty well-reasoned take on the actual advantages of token equity, well done. None of this needs a blockchain, but there does look to be a hole in the equity markets for this structure.
As an investor, I do hesitate to buy this type of token, probably out of naivety - when I buy a SEC-regulated stock I have tons of legal protections against bad corporate behavior (e.g. insider trading). Do such protections exist for tokens?
I understand general wariness of putting things on chain that don't need to be there. There are many concepts and companies out there that this is the care for. The real power of having tokens on chain comes with governance tokens, a specific type of token that has voting rights associated with it. These voting powers are proportional to the % of the token share that a person holds in their wallet, greatly re-distributing power from board members and founders to all token holders. There's a follow up article coming on this shift in power soon!
In terms of legal protections, this is something that is definitely less developed in the crypto space. This is partly due to the fact that most tokens are not securities, so they are not regulated by govt orgs like the SEC. For now, investing in newer crypto tokens comes with the responsibility of individual research and running investments by people in the community who can vet their validity. Regulation in the space is its own can of worms that we will also be diving into on the Coinsights blog soon.
Thought this was a pretty well-reasoned take on the actual advantages of token equity, well done. None of this needs a blockchain, but there does look to be a hole in the equity markets for this structure.
As an investor, I do hesitate to buy this type of token, probably out of naivety - when I buy a SEC-regulated stock I have tons of legal protections against bad corporate behavior (e.g. insider trading). Do such protections exist for tokens?
Thanks for reading!
I understand general wariness of putting things on chain that don't need to be there. There are many concepts and companies out there that this is the care for. The real power of having tokens on chain comes with governance tokens, a specific type of token that has voting rights associated with it. These voting powers are proportional to the % of the token share that a person holds in their wallet, greatly re-distributing power from board members and founders to all token holders. There's a follow up article coming on this shift in power soon!
In terms of legal protections, this is something that is definitely less developed in the crypto space. This is partly due to the fact that most tokens are not securities, so they are not regulated by govt orgs like the SEC. For now, investing in newer crypto tokens comes with the responsibility of individual research and running investments by people in the community who can vet their validity. Regulation in the space is its own can of worms that we will also be diving into on the Coinsights blog soon.