The Never-Ending Debate on Token Value
Every few years, the crypto market gets a reality check. Token prices crater. Narratives collapse. Investors scramble for answers. And yet, the same question lingers like a bad hangover: What makes a token valuable?
White Papers churn out jargon. Founders pitch buzzwords. Speculators latch onto whatever promises the next 100x. Staking? Governance? Buybacks? Supply burns? The theories pile up, but none hold weight when the market turns brutal.
Look around. DeFi projects are drowning in abstractions — synthetic yield, circular mechanics, forced scarcity — none of it real. The hard truth? Crypto isn’t pioneering new economic laws. It’s speed-running financial history, making the same mistakes TradFi made centuries ago.
And just like before, only a handful will adapt. The rest will disappear.
A Question as Old as Markets Themselves
Value has never been a guessing game. Since the dawn of financial markets, assets only held weight if they did something.
Early stocks? Worthless unless they paid dividends. Investors treated them like high-risk bonds, demanding cold, hard cash in return. Ownership meant nothing without tangible yield.
Fast forward to today. DeFi is asking the same thing: “If the token doesn’t generate revenue, why should anyone hold it?”
Speculation alone doesn’t cut it. It never has. Stocks that lacked clear financial justification got discarded. Companies that reinvested intelligently thrived. Markets evolved.
DeFi will have to as well — whether it wants to or not.
Where DeFi and TradFi Collide
Crypto loves to think it’s different. But here’s the brutal truth: it’s walking the same road traditional finance did.
Buybacks? TradFi already played that game. They only work when an asset has actual value. Shrinking supply doesn’t create demand — it just disguises the absence of it.
Staking rewards? Looks good on paper — until you realize most payouts come from unsustainable emissions, not real revenue. That’s not “yield.” It’s just inflation wearing a suit.
Governance tokens? Sold as power, but functionally useless. Token holders “vote,” but without enforceability, it’s nothing more than an on-chain suggestion box.
This isn’t innovation — it’s financial history on repeat. TradFi evolved past this phase. It learned that yield without revenue is a mirage. That stock buybacks don’t mean a thing unless the business itself is growing.
The real question? How long before DeFi wakes up?
The Cultural Shift from Dividends to Growth
For centuries, wealth was measured in cash flow. A stock that didn’t pay dividends? Worthless.
Then, everything changed.
Tech giants rewrote the rules. Amazon, Tesla, Google — none paid dividends, yet they became trillion-dollar behemoths. Instead of handing out profits, they reinvested everything into market dominance.
Investors rewarded them. Why? Because they understood the game had changed.
Half the Nasdaq doesn’t pay dividends anymore. Yet these companies are some of the most valuable in history.
Meanwhile, DeFi is still stuck in the past. It clings to staking rewards and supply burns like a lifeline, as if tokenomics tricks will hold up forever. But history says otherwise:
Markets reward real growth, not gimmicks.
The question is no longer if DeFi will learn.
It’s whether it will survive long enough to evolve.
This is the breaking point. The projects that figure it out will define the future. The rest? Just another chapter in the long history of financial failures.
Capital Allocation: The One Fundamental Decision
Every project, whether a Fortune 500 company or a DeFi protocol launched last week, faces the same fundamental choice:
Do we reinvest in growth, or do we return capital to holders?
In traditional finance, the answer depends on the company’s lifecycle.
- High-growth startups — Amazon, Tesla, Google — don’t pay dividends. Every dollar goes toward expansion, new markets, and innovation.
- Mature corporations — Coca-Cola, IBM — return capital to shareholders because they can’t grow as aggressively anymore.
Now look at DeFi. Where does it fit?
Most projects are still in survival mode — competing for liquidity, struggling for adoption, and fighting off irrelevance. And yet, some are already distributing staking rewards, running buybacks, and treating their tokens like dividend-paying stocks.
It’s financial malpractice.
You don’t see Amazon issuing dividends while it’s scaling to dominate markets. You don’t see Tesla buying back shares when it still has factories to build. Growth-stage businesses don’t return capital — they deploy it.
DeFi protocols should be reinvesting aggressively — expanding their user base, refining their products, and increasing real revenue. But instead, they’re draining resources on tokenomics tricks that create temporary hype at the cost of long-term survival.
This is the core dilemma: chase short-term price pumps or build for the future.
Most won’t get it right.
The DeFi Parallel: Staking, Buybacks, and Misplaced Priorities
Crypto moves fast, but bad ideas move faster.
DeFi keeps recycling old TradFi mechanics — staking rewards, buybacks, governance tokens — as if they’re magic bullets. But TradFi learned long ago that these tools don’t work without real cash flow.
- Staking rewards? They’re often unsustainable emissions, not actual yield.
- Buybacks? They only work if the token has real demand — which most don’t.
- Governance tokens? They offer no enforceable rights, just the illusion of control.
Projects treat these mechanisms as value accrual strategies, but in reality, they’re financial crutches — band-aids for a deeper problem: a lack of organic utility.
DeFi needs to ask itself: Why does this token exist? What function does it serve? What problem does it solve?
If the only answer is “staking rewards” or “governance,” it’s already dead in the water.
The next cycle won’t be won by gimmicks. The projects that survive will be the ones that build actual revenue models, sustainable incentives, and tokenomics designed around real utility — not just token printing and forced scarcity.
The Buyback Illusion: Why Tokens Must Evolve or Fade Into Irrelevance
Scarcity without demand is meaningless.
DeFi projects love to talk about buybacks as if they are some financial alchemy. The idea is simple: reduce supply, increase price — a formula borrowed straight from TradFi. But here’s the catch: it only works when the asset is fundamentally valuable in the first place.
In traditional markets, stock buybacks make sense because stocks represent ownership in a business with revenue, cash flow, and assets. A share buyback reduces outstanding shares, meaning each remaining share now represents a larger stake in a profitable company.
But a DeFi token isn’t a stock. It doesn’t represent ownership. It doesn’t offer legal claims. It doesn’t distribute earnings. If a token has no organic demand, reducing supply does nothing but create a temporary liquidity trap for late buyers.
Countless projects have tried buybacks. Where are they now?
The truth is, supply-side economics alone doesn’t create sustainable value. Real demand comes from utility. A token must be an inextricable part of the protocol’s success, not just an asset that’s artificially manipulated through forced scarcity.
This is the problem DeFi must solve. And some teams are already working on the answer.
Take Ascendant Finance, for example. While most projects are stuck recycling TradFi mechanics without the foundation to support them, Ascendant is pioneering new models that go beyond supply tricks and short-term emissions games. Their approach is built around token ecosystems that drive engagement, align incentives, and generate real economic activity — ensuring that token demand isn’t just speculation, but necessity.
The next era of DeFi won’t be won by supply burns and governance promises. It will be defined by protocols that understand the deeper mechanics of value.
Staking Rewards: Synthetic Yield vs. Real Yield
If staking rewards are your only token utility, your token has no real purpose.
DeFi projects love staking because it sounds sophisticated. “Stake your tokens and earn yield!” But where does that yield come from? In most cases, it’s just inflation disguised as passive income.
Real yield comes from protocol revenue, fees, or actual economic output. Synthetic yield — the kind most DeFi projects use — comes from new token emissions, meaning investors are paid in the same asset they’re trying to avoid being diluted by.
This isn’t a new problem. Traditional finance already saw this play out in the Ponzi-like dividend schemes of the early 1900s, where companies issued dividends not from profit, but from issuing new stock. It worked — until it didn’t. Once people realized that their “dividends” were just a mirage, the whole system collapsed.
The same thing will happen in DeFi. The projects relying on unsustainable emissions will fade, while those that structure their tokens around real value capture will thrive.
Again, this is where teams like Ascendant Finance are setting themselves apart. Instead of copy-pasting staking mechanics from old DeFi models, they’re designing tokenomics that integrate staking with actual utility — where rewards aren’t just inflationary emissions, but tied to the protocol’s fundamental success.
DeFi’s Impossible Choice: Hypergrowth or Yield
DeFi wants to have it both ways. It wants to be a high-growth industry while also paying out yield. But here’s the hard truth: you can’t have both.
A protocol aiming for 100x returns needs to reinvest every dollar into growth — expanding its ecosystem, acquiring users, refining its products. That’s how startups become industry giants. Amazon didn’t issue dividends while it was still crushing competitors and scaling globally. Tesla didn’t buy back shares when it was fighting for market dominance.
And yet, many DeFi projects are doing exactly that — paying out staking rewards, running buybacks, issuing governance incentives — long before they’ve even secured product-market fit.
It’s financial suicide.
Traditional markets learned this lesson decades ago. The fastest-growing companies don’t distribute profits — they reinvest them. Dividend-paying stocks? Those are for companies that have already peaked — firms with no better way to deploy capital.
So why is DeFi acting like a mature, stagnant industry when it’s still in its infancy?
The answer is simple: many projects aren’t actually building for the future. They’re optimizing for short-term price action, keeping token holders happy in the moment instead of ensuring they’ll be around five years from now.
Protocols that chase both yield and hypergrowth will fail. The ones that commit to real reinvestment, sustainable models, and long-term vision — those will be the ones left standing.
The era of easy liquidity and artificial staking rewards is ending. DeFi must grow up — or fade away.
Governance Tokens: The “I Voted” Sticker Economy
Governance tokens were supposed to redefine ownership. Instead, they became on-chain participation trophies.
The premise was simple: let token holders vote on protocol decisions. But in reality, most governance mechanisms lack any real-world enforceability.
- Holding a stock means ownership — legal claims to revenue, voting power in board decisions, and regulatory protections.
- Holding a governance token means you can make a proposal and hope the core team listens.
That’s not governance. That’s a suggestion box.
This is why most governance tokens trade like speculative assets, not equity-like instruments. Their value isn’t tied to cash flow, enforceable rights, or economic ownership — it’s tied to narrative and hype.
The only way governance tokens become meaningful is if they’re directly tied to a protocol’s success. That means:
- Revenue-sharing mechanisms that distribute actual returns to holders.
- Locked voting models that prevent mercenary whales from dictating outcomes.
- Staked governance participation that requires long-term alignment, not flash voting.
If governance tokens want to survive, they must evolve. Otherwise, they’ll remain nothing more than blockchain’s version of an “I Voted” sticker.
The Way Forward: Can DeFi Escape Its Own Cycle?
DeFi is at a breaking point. The current model isn’t working.
We’ve seen it play out — protocols launch, tokens pump, staking rewards flood the market, and liquidity rushes in. But the second incentives dry up, everything collapses.
It’s a cycle of short-term extraction, not long-term growth.
So what comes next?
- The death of emissions-based staking. Sustainable projects won’t rely on paying holders just to keep them from selling.
- The rise of revenue-backed tokens. Tokens will need to capture real value, tied to network effects, transaction fees, or user participation.
- Protocol sustainability over artificial scarcity. Supply reductions won’t mean anything if demand isn’t structurally embedded into the token model.
The next wave of DeFi winners won’t be the ones clinging to outdated TradFi tricks. They’ll be the ones breaking out of the cycle and redefining what token utility actually means.
Final Thought: What Comes After Governance Tokens?
If governance tokens are the final step in DeFi’s evolution, this industry is doomed.
Voting isn’t enough. Staking incentives aren’t enough. Buybacks and burns won’t save broken token models.
The next generation of DeFi will be utility-driven, not speculation-driven. Tokens will be deeply embedded in protocol success, not just sitting in wallets waiting for artificial yield.
The question now is simple: Who’s building for that future?
Some projects are already laying the groundwork — Ascendant Finance and others are moving beyond short-term fixes, creating frameworks that drive real demand and ecosystem-wide participation.
The ones who get it right won’t just survive.
They’ll define the next era of DeFi.
Astraea is an analyst with a rich background in finance, having worked at various research firms where he gained deep insights into investments and corporate strategies. Now, he blends this expertise with a unique perspective, crafting content for those venturing in finance, tech, or crypto. For more information check out Ascendant Finance.
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A Word of Caution
Nothing in this article is financial advice. This was written purely for entertainment purposes, and we don’t hold or own any of the coins mentioned. If you’re tempted to jump into the meme coin frenzy, remember to do your own research — or at least check if the developer is live-streaming from a dog cage or toilet first.
