Insights

The great value migration from tokens to equity

In 2026, discussing “Web3” and “tokens” has become the financial equivalent of discussing historical biography. It is old news. For the up-to-speed investor, the conversation has moved past the technology and toward a more fundamental question: where does the value actually accumulate?

For years, the industry operated under one mantra: value accrues in the token. We built layers, protocols, and bridges, all waiting for the moment “institutional money” would arrive and ignite the market.

The institutional money has finally arrived. But it didn’t bring the thunder we expected. It brought a paradigm shift that is quietly devaluing the traditional token model.

Why Profits Fled the Ticker for the Cap Table

Look at Uniswap. Despite processing trillions in volume, its token, UNI, had no direct claim on protocol revenue for years. In late 2025, the community voted to flip the fee switch, but they chose a burn-driven supply reduction rather than a direct distribution. Why? To avoid the “security trap.” By attempting to engineer value accrual through deflation rather than dividends, they are performing a high-wire legal act. Even so, early 2026 data shows UNI trading at an astronomical 207x revenue multiple. For context, even the most aggressive “Magnificent Seven” tech stocks rarely sustain multiples above 30x or 40x. For the institutional manager, this raises a question: why buy a high-premium token with a precarious legal structure when you can own the private equity of the companies building the underlying infrastructure?

While the retail market was chasing the next "utility" token, institutional capital was quietly buying the equity of the firm that owns the infrastructure.

Contrast this with Circle. As the issuer of USDC, Circle is a cornerstone of the digital economy. In 2025 alone, its issuance soared 72% to over $75 billion. But look at where the money went. Circle generated $2.6 billion in reserve income last year — a massive sum driven by high yields on its underlying assets. However, if you held the USDC token, you earned nothing. The $2.6 billion in value stayed in-house, accruing entirely to the private equity holders (and later the public shareholders) of Circle Internet Group.

While the retail market was chasing the next “utility” token, institutional capital was quietly buying the equity of the firm that owns the infrastructure.

JP Morgan Lesson: Profit Stays in the House

In 2025, stablecoins processed $12 trillion in on-chain volume, rivaling traditional payment giants like Visa. While the technology has moved from the speculative fringe to core financial infrastructure, the value capture remains traditional.

Consider J.P. Morgan’s Kinexys platform, which has processed over $1.5 trillion in volume since its inception. It uses blockchain to settle trades in seconds, bypassing the costly SWIFT system. Yet, there is no community token linked to it – the billions in saved operational costs flow directly into the bank’s earnings reports.

Similarly, when BlackRock launched its BUIDL fund — the tokenized treasury fund that has hit TVL $2.5B to date — the value accrued directly to BlackRock’s management fees and its private equity partners.

Current industry projections now see the tokenization of global financial infrastructure reaching $10 trillion by 2030. The blockchain becomes the new standard for the “plumbing” of finance, but the “water” — the actual profit — is being kept within the equity of the firms that own the pipes. The infrastructure is Web3-native, but the profit is equity-native. If you want a piece of that value, you have to buy the stock.

Utility Constructions of “Sticks and Tape”

The traditional DAO token model is increasingly difficult to justify. Many of these tokens are what I call “made of sticks and duct tape.” They offer truncated rights to vote on proposals that the core team can technically ignore at any time.

There is no hardcode value accrual, unlike Bitcoin or Ethereum, where the system cannot function without the asset. As of Q1 2026, Bitcoin and Ethereum together command 70% of the total market capitalization, leaving the remaining 22,000+ assets to fight over a shrinking pool of relevance. For most application-layer projects, the token is a marketing tool, not a financial engine.

As regulation tightens, the “security trap” has closed. The transition of the US from regulation by enforcement to a legislation-driven framework, combined with the EU’s MiCA regulation, has effectively ended the era of the “unclassified” asset.

Below is the structural comparison of the utility and security token models and the regulatory protocols that now govern them.

The irony of the “security trap” is that by trying to make a token more valuable by adding a fee-link or revenue share, a project effectively kills its own marketability.

Under the MiCA framework in Europe and the evolving Digital Asset Market Clarity Act in the US, a security token cannot simply float between jurisdictions. Once it is classified as a security, it is tethered to the local laws of the issuer and treated as a localized financial instrument. While this kills the instant liquidity, it provides something the ‘sticks and tape’ model cannot: a fiduciary floor. Institutional capital is choosing legal enforceability over the illusion of liquid utility.

This is why institutional capital is pivoting. If you have to deal with the friction of regulation anyway, it is more logical to own the private equity stake where the legal rights are unambiguous, than a token that is neither truly global nor truly a stock.

The Pivot to Private Equity

The market has already noticed. For the past two years, dedicated blockchain funds have shifted their focus. They have largely stopped chasing the next “100x token” and started competing for equity stakes in the companies building the infrastructure. Even if a project is Web3-native, the investors are looking for equity. They want a legal claim to the revenue, not a community token that might turn into a pumpkin if the team changes its mind.

This shift has created a new bottleneck in the secondary market. As value migrates from liquid tokens to illiquid private equity, the need for a high-tier matchmaking engine has never been greater.

The Takeaway

We are entering a period where the front-end of crypto, e.g. the flashy DAO tokens and retail speculation, is decoupling from the back-end of serious capital growth.

The winners of the next cycle won’t be those who find the right token, but those who find the companies controlling the workflows. In this new era, equity is the transparent record of value. While retail investors track token volatility, professional capital is flowing into the private cap tables.