Opinion: Tokens should capture on-chain value, equity should capture off-chain value.

On December 24, Jake Chervinsky, Chief Legal Officer of the cryptocurrency venture capital firm Variant Fund, posted on social media stating, “The debate about Tokens and equity has just begun. Many crypto projects were born during the era of former SEC Chairman Gary Gensler, when strong regulatory pressure forced development companies to direct almost all value towards equity rather than Tokens. Now, the policy environment is changing, and new opportunities are emerging. It will take a lot of time and experimentation to figure out how (or if) Tokens and equity can work well together. This round of experimentation is starting right now. I have no particular stance on the specifics of Aave; I just want to emphasize one point: clarity is always the most important. Token holders must clearly know what they own, what they can control, and what they cannot control. The design space for value capture through Tokens is extremely vast, far greater than traditional equity. I believe that for a considerable period of time, it will be unlikely to form a standardized Token model like stocks. We believe that Tokens should carry on-chain value, while equity should carry off-chain value. The core innovation unlocked by Tokens is self-sovereign ownership of digital property. Tokens enable holders to directly own and control on-chain infrastructure without relying on off-chain intermediaries. Off-chain value, on the other hand, is different. Token holders cannot directly own or control off-chain income or assets, so in most cases, this value should belong to equity rather than Tokens. Of course, other models may also work. Some projects may choose a single asset model with no equity at all; others may decide to treat their Tokens as tokenized securities, subject to new rules that the SEC will formulate for that market in the future.”