Thread by @lex_node

here is a quick thread on what I mean by the threat of material adverse token/equity double dip 👇

https://twitter.com/Orlando_btc/status/1468020299069276166

team issues 'valueless governance token' to users; its only official function is to govern how the rest of those tokens get spent, maybe some parameters

token acquires high market cap based on speculation of future value b/c after all, the protocol is very popular!

team & VCs issue tokens to themselves

team & VCs also issue tech company equity to themselves (common stock or preferred stock)

team & VCs sell their tokens into the speculative token-market

team & VCs say: "we can't drive value to token because then it would be a security, sorry guys but thanks for the free governance stewardship!"

team & VCs still want to have a business and make even more money together, so they work on "regulated DeFI" or "strategic research" and either IPO or sell the equity to a tradBank or CEX to get a "second dip" or "second exit"

meanwhile, token value bleeds out slowly as people eventually realize that a governance token without a value flywheel is a liability, not an asset

this hasn't happened yet frens but imo it's almost a certainty that it will; back when I was doing many DeFi project financings I had discussions with VCs' biglaw attorneys where they expressly fought to preserve the value of the VCs' much-coveted "double dip"

the best example of this is $UNI

it was distributed with a "fee switch that could be turned on"

minnows have been pining for fee switch activation for almost two years; whales/team won't pass it because of the regulatory risk

why would they ever accept a scintilla of risk when they don't need to?

Uniswap fanbois made the token super valuable for no reason, so the team/VCs can exit into that without the added risk of fee activation

they still own & can monetize the company equity & "Uniswap brand"