lately, i’ve been thinking about capital efficiency—specifically, whether this era’s fixation on immediate value distribution is actually productive, or just a symptom of a market desperate for proof-of-worth after the shitcoin bonanza
the narrative is clear: we’re moving from tokens-as-pure-speculation toward tokens as proxies for project equity & future cash flows. holders want claims. they want a share of something tangible, not just number go up
but here’s the friction: people demand revenue share from tokens at a stage when, in traditional markets, even blue-chip equities with decades of history would never contemplate a dividend. statistically, less than 20% of s&p 500 companies under 10 years old pay a dividend, and those that do tend to be in sectors with little left to reinvest in. dividends are not a growth strategy—they’re an admission you’ve run out of ideas
so why, in crypto, do we think every micro-cap deserves a cash split before it’s even survived a full cycle? is redistributing early revenues truly “community alignment,” or just short-termism in new packaging? what’s actually optimal use of capital in these formative years?
better uses of capital than pre-mature redistribution:
- customer acquisition: double down on user growth—rebates, referral programs, ecosystem incentives, grants
- product velocity: fund relentless shipping—hire devs, ship features, fix bugs, pursue PMF
- liquidity: deepen on-chain markets, reduce slippage, bootstrap strategic pools
- brand equity: invest in thought leadership, content, design, and partnerships. narrative > noise
- strategic reserves: maintain war chests to navigate bear markets & black swan risk
growth-forward alternatives to rev-split:
- protocol-owned liquidity: accumulating & compounding protocol assets to drive network effects & long-term control
- usage mining: reward participation, not just passive holding
- “sweat equity”: milestone-based rewards to contributors
- rolling retroactive airdrops—align incentives for actual use, not just capital parked
when early revenue-sharing does make sense:
- cash-flow native protocols (eg. revenue-generating defi platforms where ongoing yield is the product)
- service DAOs or node networks that function as co-ops & can boost retention/participation with regular payouts
- small cap protocols where user alignment & stickiness is existential—distribution becomes marketing if the share is meaningful & defensible
- only if redistributing grows the pie, not just slices it thinner. we shoot ourselves in the foot often re fractionalization & dilution
bottom line:
early distribution is rarely optimal in true growth environments. capital is oxygen—giving it away too soon suffocates future optionality. reserve redistributions for when new capital can’t create more value than returning it to holders. in the meantime: build, compound, and only share the spoils when you’re truly past the inflection
disclaimer: this is not one size fits all, but something to chew on 2 replies
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