Executive Summary
The central question this report addresses is one we have heard repeatedly since publishing History Doesn’t Repeat, But It Rhymes. What exactly do you own when you buy a crypto token? Most investors assume the answer is that token ownership confers an equity-like claim on a protocol’s success. This is wrong, but the correct answer is not “nothing.” It is something more precise and, in several cases, more compelling.
Tokens are commodities. They are the operating currencies of decentralised systems, consumed by usage and governed by supply mechanics written into code. The investment case for each is therefore a commodity investment case: measurable demand, transparent supply, and a framework for determining future prospects.
This report introduces a four-archetype framework for understanding what a token holder owns and how to value it. Each archetype represents a distinct economic mechanism connecting protocol success to token value.
Archetype 1 — Infrastructure Tokens are the monetary bases of growing digital economies, consumed and burned by usage. Their value is a function of the economic activity they enable relative to the supply of the thing that activity cannot function without.
Archetype 2 — Coordination Mechanism Tokens make decentralised physical and software networks possible without a central company. Their value is rooted in the minimum tokens operators must hold for the network to function. A provable demand floor from on-chain data alone.
Archetype 3 — Revenue Buyback Tokens receive systematic open market buying from protocol revenue through mechanisms that, in the strongest cases, cannot be suspended or redirected. The rate at which supply is retired determines whether the mechanism is doing meaningful work.
Archetype 4 — Permanent Burn Tokens are destroyed by protocol revenue forever. No governance decision can reverse a burn. The investment case is the rate of permanent supply destruction and the proximity of the deflation crossover, the point at which annual burns exceed annual emissions.
We then apply each framework to a live example from our portfolio: ETH, WMTx, HYPE, and SKY. Across all four, the market is pricing the current state, while the investment case is the trajectory. This framework is designed to make that trajectory measurable.
Read the full report here: What Are Crypto Tokens
