Most cryptocurrency projects are essentially just companies with tokens attached.
Written by: Crypto Dan
Translated by: Saoirse, Foresight News
People always ask why almost all tokens go to zero, with only a few exceptions like Hyperliquid.
It all comes down to something that no one openly discusses: the structural game between company equity and token holders.
Let me explain it in simple terms.
Most cryptocurrency projects are essentially just companies with tokens attached
They have the following characteristics:
A physical company
Founders holding equity
Venture capital investors with board seats
Chief Executive Officer (CEO), Chief Technology Officer (CTO), Chief Financial Officer (CFO)
Profit goals
Future exit (cash-out) expectations
Then, they will issue a token as an afterthought.
Where is the problem?
Only one side can capture value, and equity is almost always the winner.
Why dual financing (equity + token) doesn't work
If a project raises funds through equity and also issues tokens for sale, it immediately creates conflicting interests:
Equity holders' interests:
Revenue → flows to the company
Profits → flow to the company
Value → belongs to shareholders
Control → belongs to the board
Token holders' interests:
Revenue → flows to the protocol
Token buyback / burn mechanism
Governance rights
Value appreciation
These two systems will always be in conflict.
Most founders will ultimately choose the path that satisfies venture capitalists, while the value of the tokens will continuously erode.
This is why even many projects that "appear to be successful" still struggle to escape the fate of going to zero.
Why Hyperliquid stands out in a field where 99.9% of projects fail
In addition to being the protocol with the highest fee revenue in the crypto industry, the project also avoided the biggest "killer" that leads to token failures — venture capital equity financing rounds.
Hyperliquid has never sold its equity, has no venture capital-dominated board, and thus has no pressure to direct value towards the company.
This allows the project to do what most projects cannot: direct all economic value towards the protocol rather than the company entity.
This is the fundamental reason why its token can be an "exception" in the market.
Why tokens cannot operate like stocks on a legal level
People always ask, "Why can't we make tokens directly equivalent to company stocks?"
Because once a token has any of the following characteristics, it will be classified as an "unregistered security":
Dividend distribution
Ownership
Company voting rights
Legal claims to profits
At that point, the entire U.S. regulatory body would crack down on the project overnight: exchanges would be unable to list the token, holders would need to complete KYC, and its global issuance would be illegal.
Therefore, the crypto industry has chosen a different path of development.
(Optimal legal framework for successful protocol adoption)
Today, the "ideal" model is as follows:
The company does not generate any revenue; all fees belong to the protocol;
Token holders obtain value through protocol mechanisms (such as buybacks, burns, staking rewards, etc.);
Founders obtain value through tokens rather than dividends;
No venture capital equity exists;
Economic decision-making power is controlled by a DAO rather than the company;
Smart contracts automatically allocate value on-chain;
Equity becomes a "cost center" rather than a "profit center."
This structure allows tokens to function economically similarly to stocks while not triggering securities-related laws; Hyperliquid is currently the most typical success case.
But even the most ideal structure cannot completely eliminate contradictions
As long as a project still has a physical company, potential conflicts of interest will always exist.
The only way to achieve truly "contradiction-free" status is to reach the ultimate form like Bitcoin / Ethereum:
No physical company
No equity
Protocol operates autonomously
Development work funded by a DAO
Possesses neutral infrastructure attributes
No legal entity that can be attacked
Achieving this goal is extremely difficult, but the most competitive projects are moving in this direction.
Core reality
The reason most tokens fail is not "poor marketing" or "bear market conditions," but rather structural design flaws.
If a project has any of the following characteristics, then from a mathematical perspective, that token cannot achieve long-term sustainable appreciation; such designs are doomed to fail from the start:
Engaged in venture capital equity financing
Conducted private token sales
Set up token unlock mechanisms for investors
Allowed the company to withhold revenue
Used tokens as marketing coupons
In contrast, projects with the following characteristics can achieve completely different outcomes:
Directly direct value to the protocol
Avoid venture capital equity financing
Do not set up token unlock mechanisms for investors
Align the interests of founders with those of token holders
Render the company economically insignificant
The success of Hyperliquid is not due to "luck," but rather stems from thoughtful design, a well-structured token economy model, and a high degree of alignment in interests.
Therefore, the next time you think you've "discovered the next potential token that could increase 100 times," you may have indeed found it, but unless the project can adopt a token economic design like that pioneered by Hyperliquid, its ultimate outcome will inevitably be a slow decline to zero.
Solution
Only when investors stop funding projects with design flaws will project teams begin to optimize their token economies. Project teams will not change because of your complaints; they will only make adjustments when you stop investing in them.
This is why projects like MetaDAO and Street are so important to the industry — they are setting new standards for token structures and holding project teams accountable.
The future direction of the industry is in your hands, so please allocate your funds rationally.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
