The Token Model Is Broken, but Tokenization Still Holds Promise
Crypto tokens were supposed to democratize finance, giving retail investors access to opportunities once reserved for insiders. Instead, many projects have repeated the same mistakes: excessive insider ownership, poor tokenomics, and speculative hype that leaves everyday buyers holding the bag.
The problems are clear. Too many tokens launch with a majority of supply controlled by early investors, teams, and venture backers. When these insiders dump their holdings, retail traders bear the losses. Others suffer from flawed designs—excessive inflation, unclear utility, or unsustainable rewards that collapse once incentives dry up.
Yet, despite these failures, the underlying idea of tokenization remains powerful. The solution isn’t to abandon tokens altogether but to fix their flaws through better regulation and a shift toward real-world assets.
Regulation can help by enforcing transparency and fairness. Clear rules around vesting schedules, lock-ups, and disclosures would prevent the worst abuses. Projects could be required to demonstrate legitimate utility before launching tokens, rather than relying on speculation.
Even more promising is the rise of asset-backed tokens. Tokenized versions of stocks, bonds, real estate, and commodities offer real value instead of empty promises. These assets are already regulated, reducing fraud risks, and their tokenization can unlock liquidity for traditionally illiquid markets.
The original vision of crypto—open, fair, and accessible finance—is still worth pursuing. But tokens must evolve. By learning from past mistakes and embracing real-world use cases, the next wave of tokenization could finally deliver on its promise.
