Crypto▼ Bearish
Delphi Roundtable: Why Token Valuations Should Trail Equity
Delphi Digital analysts say token caps should stay below equity values since equity gets profits. Buybacks can narrow the gap. Governance doesn't give hard claims.
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Delphi Digital analysts have revived a debate over whether crypto tokens and company equity can coexist without one side capturing most of the value.
During a July 15 roundtable, analyst Ceteris said token market capitalisations should usually stay below the value assigned to the related company. Equity holders normally receive the bulk of business profits, he said. The session was released under the title “Are Crypto Tokens Fundamentally Broken?” and covered projects such as Grass and Venice, where a private company operates alongside a publicly traded token.
Ceteris said the difference in rights should restrain token valuations when a project also has equity investors. Most actual cash profits ultimately flow to shareholders, he said. The token’s market capitalisation “should generally be smaller” unless the project has a clear system that sends value to holders.
Problems arise when the boundary between tokens and equity is left unclear, Ceteris said. A company may market the token as the centre of an ecosystem while keeping revenue, intellectual property, customer contracts, and sale rights inside the equity entity. Token buyers may then price the asset as though it captures the full business.
The setup creates groups with different interests. Equity holders may want the company to retain profits, raise capital, or pursue a sale. Token holders may prefer fee sharing, buybacks, burns, or stronger onchain governance. Management must decide which side receives value from the product.