Laura Shin hosts Ryan Yi, founder at OnChain Group and crypto VC, alongside Felipe Montalegre, co-founder and CIO at Theia, a liquid token fund focused on long-term investments in revenue-generating projects.

The conversation centers on the ongoing tension between tokens and equity structures in crypto, sparked by Risk Labs Foundation's proposal to convert Across Protocol from a DAO to a traditional company. This represents the latest example of crypto entities finding DAOs cumbersome for business operations and seeking more nimble structures.

The discussion explores how regulatory uncertainty under the previous administration forced artificial separation between teams and tokens, while the new regulatory environment enables more rational capital structure decisions. Both guests bring extensive experience with token-equity problems that have plagued the industry.

Across Protocol's Token-to-Equity Conversion Strategy

Risk Labs Foundation proposed retiring ACX tokens and offering equity exchange because 'the token and DAO structure has materially impacted our ability to close partnerships and integrations' with institutional partners.

The team manages both UMA Oracle and Across bridge products, with Across previously representing 50% of UMA activity but now less than 10%, while UMA's main usage shifted to Polymarket prediction markets.

Across lost approximately 80% of its TVL since peak, prompting strategic refocus on the core UMA product and elimination of managing separate token communities for each product.

The proposal offers token holders three options: convert to equity in Across Corp (5M+ tokens), equity in SPV (under 5M tokens), or cash buyout at $0.04375 - 25% above 30-day average.

Aave's Governance Crisis and Restructuring Solution

Aave Labs requested $25 million in stablecoins plus 75,000 Aave tokens from the DAO treasury, with all revenues flowing to the Aave DAO rather than competing equity entities.

'The overall point of the proposal, which was to unify equity and token under one ticker, was extremely important' for solving the existential token-equity split problem - Felipe.

The restructuring resulted in key contributors like BGD and Aave Chan leaving, but established centralized control under Stani to compete with focused rivals like Morpho.

Morpho solved the equity-token problem by placing equity in a not-for-profit entity with mandate to support tokens, preventing dividend payouts to equity holders.

The Fundamental Problems with DAO Governance

Stani described DAO building as 'fighting your own organizational structure every single day' where 'proposals that should take a day can often take weeks of forum posts, temperature checks, and multiple votes.'

'DAOs are good at imposing controls, they're not good at moving quickly' and cannot compete with global fintech companies led by decisive leadership - Felipe.

DAOs become politicized quickly with participants forming alliances and leaning toward loudest voices, creating 'politicians instead of founders' managing the organization.

The structure removes corporate accountability mechanisms while keeping bureaucratic inefficiencies, making it 'the worst parts of corporate bureaucracy' without proper oversight.

MetaDAO's Market-Driven Governance Innovation

MetaDAO creates two tokens for competing proposals, with the business adopting whichever decision makes the token trade higher, letting markets rather than politics decide outcomes.

'Investors decide the outcome of businesses based on skin of the game trading decisions' where those with most to lose from wrong outcomes have the loudest voice - Felipe.

The system requires significant capital commitment to influence decisions - labs entities wanting to pass proposals would need to buy substantial token supply, aligning incentives with outcomes.

This approach balances CEO operational freedom with token holder control over capital allocation and board-level decisions, avoiding both political inefficiency and unchecked power.

Regulatory Clarity Enabling Rational Capital Structures

Under the Gensler regime, 'lawyers were advising people against' making public commitments to tokens, forcing artificial separation between teams and token value creation.

The new regulatory environment enables founders to 'be a lot more open in terms of their risk tolerance in terms of speaking about their token more openly and actually associating with their token.'

Projects like Derive published official releases committing that 'the token was at the center of their business' with no competing equity, representing legally meaningful commitments to token holders.

Both Aave and Uniswap moved to unify token and equity behind tokens after years of forced separation, demonstrating the regulatory constraint was the primary barrier.

The Vision for Global Token-Based Capital Markets

'There are only 8,500 public companies for like half the world population' with traditional VC requiring connections in San Francisco or New York and US residence - Felipe.

The token vision enables 'global capital flows on the internet, global fundraising through ICOs' that democratizes access beyond traditional gatekeeping mechanisms.

At least half of the top 20 most profitable crypto projects are purely on-chain businesses with tokens, proving the model's viability for representing business value.

The industry is transitioning 'from series B to series C, series D' maturity where token holder rights and institutional plumbing through ETFs create parallel public market structures.