When value gets distributed to both equity and token holders simultaneously, you end up with an awkward dynamic that kills demand for the equity piece. Think about it—why would anyone want to own shares if they're also exposed to this weird token obligation running parallel? It creates this messy situation where value flows to an entity, but you can't actually claim clear ownership or rights. The fundamental issue is the competing claims on cash flow and governance. Investors face a tough choice: am I buying equity for ownership rights, or are the tokens supposed to capture that upside? When both exist, neither becomes attractive. This misalignment between token mechanics and traditional equity structures leaves projects struggling to justify either instrument to their stakeholders.