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

On December 24th, Jake Chervinsky, Chief Legal Officer of cryptocurrency venture capital firm Variant Fund, posted on social media, "The debate about tokens versus equity has only just begun. Many crypto projects originated during the era of former SEC Chairman Gary Gensler, when strong regulatory pressure forced developers to direct almost all value toward equity, not tokens. Now, the policy environment is changing, and new opportunities are emerging. Figuring out how (or whether) tokens and equity can work well together requires a lot of time and experimentation. And this experimental phase is beginning now."

(Regarding Aave) I don't have a particular stance on the specifics, but I want to emphasize one point: clarity is always paramount. Token holders must clearly understand what they own, what they can control, and what they cannot control. The design space for token value capture is extremely vast, far exceeding that of traditional equity. I believe it's unlikely that a standardized token model will emerge like that of stocks for a considerable period. We believe tokens should represent on-chain value, while equity should represent off-chain value. The core innovation unlocked by tokens is self-sovereign ownership of digital assets. Tokens allow holders to directly own and control on-chain infrastructure without relying on off-chain intermediaries.

Off-chain value is different. Token holders cannot directly own or control off-chain revenue or assets; therefore, in most cases, this value should belong to equity, not 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 and apply any new rules the SEC may develop for this market in the future.