TOKEN FUNDRAISING SHOULDN'T EXIST

Summary from the TLDR Crypto newsletter

VCs prefer token investments over equity because exits happen within one year versus 3-7 year IPO/acquisition waits, forcing founders who don't need tokens to launch them anyway and diverting attention from product building toward hype creation, community sentiment management, and mindshare battles rather than revenue generation or utility creation. Token launches require massive spending on separate teams, security audits, KOL budgets, market makers, and exchange listings, explaining why projects raise significantly more via tokens than equity and why zkSync maintains a $500 million market cap with only $50 in onchain revenue. The system creates two founder types: those genuinely wanting to build but forced into token models, and grifters like Blast and Movement who design slow-rug protocols using buzzwords and show-off marketing to extract value from secondary buyers and retail who provide the $200 million liquidity pools needed for $20 million raises to achieve 10x exits. Alignment between teams and investors ends at unlock dates when investors dump, while founders face longer vesting, leading to OTC sales through market makers or insider trading via buying low, pumping, and dumping high, with examples like Privy and Flashbots demonstrating successful equity-only models while meaningful token utility remains limited to L1s and core DeFi protocols where tokens integrate fundamentally into products.