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Token Revolution Evolves

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The Token Revival: Why Crypto Communities Are Both Right and Wrong

The crypto token landscape is a mixed bag, with Bitcoin holders basking in the glory of all-time highs, while tokenholders are left nursing their wounds. The divergence is staggering, with Bitcoin making up only 11.6% of the average retail investor’s portfolio. So, what went wrong with tokens? To answer this, let’s dive into the three key elements that have contributed to the downfall of tokens.

The Unhitching of the Token Wagon

One major issue is the concentration of tokens in the hands of insiders and private backers. Big crypto projects have launched with most tokens reserved for teams and private investors, leaving only a small fraction for the general public. This has become the norm, with tokens often experiencing a 95% depreciation after going public. It’s a trend that’s hard to accept, and it’s clear that something needs to change.

Another problem is that utility and governance tokens have been misunderstood by investors as a way to make a quick buck. People have been buying into these tokens hoping for passive price appreciation, without realizing that they often require active participation, such as staking or liquidity provision, to generate value. The price charts of prominent utility and governance tokens tell a story of confusion and a lack of connection to real-world revenue.

The Structural Deficits

Investors have also been limited to the “crypto” token market, with no wide-scale access to tokenized forms of real-world assets, such as equities or bonds. This has resulted in a lack of diversity and a limited understanding of the true potential of tokens. It’s a situation that’s finally being addressed, with regulatory frameworks like the EU’s Markets in Crypto-Assets (MiCA) providing a much-needed boost to the industry.

A New Era for Tokens

Despite the challenges, there’s a sense that the writing is on the wall for a token revival. With proper disclosures and regulatory clarity, EU investors now have access to public token offers, and a new wave of general access token fundraising projects is emerging. These projects are revitalizing the spirit of initial coin offerings, providing open and merit-based access to early investment opportunities.

Token designs are also being reimagined, with a focus on providing tangible investor value. Regulatory ambiguities are being cleared up, and token issuers are being held to higher standards. It’s a long-term positive development, even if it requires some short-term pain. With rigorous token disclosures and exhaustive due diligence requirements, the days of rigged tokenomics are numbered.

The Future of Tokenization

So, what does the future hold for tokens? It’s a future where tokenization is embedded permanently into capital markets, and decentralized applications provide value directly to a global base of tokenholders. It’s a future where investors have access to a diverse range of tokenized assets, from crypto-native tokens to real-world assets like equities and bonds.

It’s a future that requires a purge and a reinvention of the current token landscape. But for those who are willing to take the long view, the potential rewards are substantial. So, don’t write off the token just yet – it’s an asset class that’s here to stay, and its best days may still be ahead.

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