The Dark Side of Altcoins
The article "The Dark Side of Altcoins" argues that most cryptocurrency tokens inevitably fail due to a fundamental structural conflict between company equity and token holders.
Most crypto projects are essentially traditional companies with equity-held founders, VC investors, and profit motives, which later issue a token. This creates irreconcilable incentives: equity seeks to capture value (revenue, profit, control) for the company and shareholders, while tokens need value (fees, buybacks, governance) to accrue to the protocol and holders. Equity almost always wins, leading to token value drainage.
The piece highlights Hyperliquid as a rare success because it avoided VC equity financing entirely. Without a board or pressure to deliver value to shareholders, it could direct all economic value to its protocol and token.
Legally, tokens cannot function like stocks without being deemed unregistered securities (if they offer dividends, ownership, etc.), which would trigger severe regulatory crackdowns. The optimal structure is one where the company holds no equity, captures no revenue, and all value flows to token holders via protocol mechanisms, with a DAO governing economic decisions.
However, the only way to eliminate all conflict is to become a fully decentralized protocol like Bitcoin or Ethereum, with no company, no equity, and neutral, autonomously running infrastructure.
The core issue is structural, not market conditions. Tokens are mathematically destined to fail if the project had VC rounds, private token sales, investor unlock schedules, or allows the company to capture revenue. Success requires value directed to the protocol, no VC equity, aligned founder/tokenholder incentives, and an economically irrelevant company.
The solution is for investors to stop funding poorly designed projects. The future of the industry depends on capital flowing to projects with sound tokenomics, like those pioneered by Hyperliquid, MetaDAO, and Street.
深潮Yesterday 10:13
