The Dialectical Relationship Between Tokens and Project Value: Don't Treat Tokens as Equity
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The Dialectical Relationship Between Tokens and Project Value: Don't Treat Tokens as Equity
Tokens ≠ equity, good applications ≠ good tokens.
Navigating Web3 tides with focused insightsAuthor: Xiake Zhang
Today, when I saw the news that Uniswap has started charging fees, I felt a chill run down my spine.
The main reason is that they announced a change with significant impact on the protocol without going through community governance.
Many users are analyzing whether this means Uniswap Labs believes only the protocol layer belongs to the community, while front-end applications and mobile apps belong to the project team.
I think they haven't even considered these issues. Voting and governance are merely token gestures—superficial compliance. In essence, they're still following an equity-based startup model, or perhaps they simply haven’t figured out what the token is actually for.
Uniswap is, in my view, one of the most innovative applications. But a great application doesn’t necessarily mean its token is valuable. Sometimes subconsciously, we treat governance tokens as if they were equity.
The first rule of value investing: buying stock means buying a portion of company ownership.
In the crypto market, buying a token does not at all equate to buying partial ownership of a project. In this space, tokens mostly serve their own specific utilities.
1 In the long term, most tokens have no equity value—they’re merely amplifiers of sentiment
A good project doesn’t equal a good token. Uniswap is undoubtedly a top-tier project but has a third-rate token model.
In traditional business, if you believe in a company’s long-term growth, you participate in the secondary market by buying its shares.
In the crypto world, if you believe in a project’s long-term development, should you directly buy and hold its token?
That depends. My current thinking is to take a dialectical approach—focus on the token’s supply-demand structure.
For example, Uniswap’s token model involves heavy annual emissions on the supply side, while demand is limited to governance only—this setup is unlikely to work well.
With such a model, its price movement will likely depend on just two things: overall market cycles and project-specific catalysts (e.g., positive announcements).
If that's the case, why not just buy something more stable like Ethereum?
2 Tokens have wildly different utilities—you must clearly understand where their value originates
Today, many projects still don’t have tokens. For instance, Coinbase operates both an exchange and Base chain but follows a traditional equity model—if you want exposure to its growth, just buy COIN stock.
Tokens from protocols like Curve and GMX allow holders to earn a share of protocol revenue—the utility is very clear.
Many applications use tokens primarily for cold starts, but once launched, their value collapses rapidly—early clones of Uniswap and various second-tier liquidity pools fall into this category.
Some tokens have no actual application at all—like meme coins—whose main utility is emotional expression and speculation. That too is a form of value.
OpenSea originally separated governance rights from its token, indicating it initially intended to go public. It only abandoned that plan after strong user backlash.
More often, apps use tokens as a facade to manipulate users into adoption, secretly aiming to capture real revenue from user transaction fees.
Different values correspond to different price volatility patterns—different value discovery cycles. If you fail to recognize the underlying value of a token and apply a single "buy and hold" strategy across the board, you may end up severely burned.
3 Blockchain networks have their native currencies
If we compare different blockchain networks to different countries or cities, each nation has its own currency used for daily transactions, settlements, and storing value.
Under this analogy, Bitcoin and Ethereum are settlement currencies of their respective “network nations,” following a monetary value logic.
Imagine there’s a marketplace within this country, filled with all kinds of goods. Does this marketplace need to issue its own currency or token?
This was early Uniswap—it functioned perfectly without a token and even sparked the entire yield farming trend.
4 Applications built on these blockchain networks can actually exist without their own tokens
But as they grow, they naturally seek ways to monetize—and issuing a token is the most direct method.
However, designing the token model is crucial. Uniswap, for example, fears regulation, so it avoids sharing revenue. But charging fees unrelated to the token? That it dares to do.
MetaMask still has no token today, yet earns substantial protocol fees and maintains massive user adoption.
Some applications only need ETH as their settlement currency—no native token required—because they’ve found a solid product-market fit with genuine user demand.
5 Not every blockchain network needs to issue a token
There are over 180 currencies worldwide, about 130+ after excluding fixed-exchange regimes. Not all of them maintain lasting value—take the Turkish lira, which has consistently depreciated against the US dollar.
Similarly, many Layer 2 blockchains can directly use Ethereum as their base currency. Their own tokens are more like arcade tokens—value must be actively created.
And not every application needs a token either.
Globally, there are around 40,000 publicly listed companies, 170 million registered enterprises in China alone, including 114 million individual businesses.
This means only a tiny fraction of actual business entities offer equity-based profit-sharing.
Likewise, many blockchain applications succeed simply by meeting real user needs—people naturally adopt them, and they generate revenue.
For those applications that do issue tokens, buyers must clearly understand: What is its utility? What is its economic model and supply-demand dynamic?
Remember: A good app does not mean a good token.
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