😤 🗣 The Ugly Truth About Tokens: Why Most Projects Shouldn't Launch Them

Unpopular Opinion: Mental Models for Crypto Investing

Theo Delarosa
March 18, 2023

Arbitrum is finally launching their long awaited $ARB governance token.

This begs the proverbial crypto question - do projects need to launch a token and should they?

Let's be honest: most projects don't need a token

In fact, most tokens are useless, pointless, and downright harmful. They serve no real purpose, solve no real problem, and create no real value. They are nothing but a tool for greed, hype, and speculation.

Why do so many projects launch a token then? Simple: to make the founders, team, and investors rich!

That's the dirty little secret of the crypto world: tokens are just a way to raise money, often without any real product, market, or revenue and historically against established regulatory rules for such things.

They are a way to fleece the naive, the greedy, and the clueless.

Think about it. Why would a project need a token?

If it has a real product or service, it can charge for it in any currency, crypto or not.
If it has a real market or network, it can reward its users or contributors with any incentive, token or not.
If it has a real revenue or profit, it can share it with its stakeholders, equity or not.

But no, instead of doing any of that, many projects choose to launch a token, with a fancy name, a flashy website, and a whitepaper filled with selling dreams.

They promise the moon and the stars, but deliver nothing but a worthless token, a deserted community, and a sour taste in the mouth.

Not everything needs a crypto solution! Not everything needs to be built on blockchain and even if it does, it can in many cases be done without a token.

Let's face it. Most token launches are a cash grab, a quick way to raise millions of dollars from unsuspecting investors who are blinded by the hype and FOMO.

They are sold on the idea of getting rich quick, of buying into the next big thing, of joining a community of like-minded people who share their passion for crypto and blockchain.

But the reality is far from the dream

Most tokens lose value, some by as much as 99%, leaving their holders with nothing but regrets and bitterness. Most projects fail, leaving their investors with nothing but losses and disappointment.

Most teams disappear, leaving their supporters with nothing but unanswered questions and broken promises.

Oh and let’s not even get started on the farce that is decentralized governance.

In practice all we see is whale games where select rich individuals or entities are able to amass disproportional voting and governance power, essentially ruining the initial ethos of putting power back in the hands of the individual.

So why do we keep falling for the same scam, over and over again?
Why do we keep believing in tokens that have no real use, no real demand, and no real purpose?
Why do we keep ignoring the warning signs, the red flags, and common sense?

Perhaps it's because we are too eager to believe in a better future, in a world where money is fair, transparent, and decentralized.

Perhaps it's because we are too afraid to miss out on the next big thing, on the next Bitcoin, on the next Ethereum.

Perhaps it's because we are too naive to understand the risks, the costs, and the consequences. Or we simply don’t care.

But whatever the reason, one thing is clear: it’s all madness, greed, and speculation.

If we are sooooo insistent on having crypto projects with tokens, then we need to demand more from our projects, our tokens, and ourselves.

We need to focus on real problems, real solutions, and real value to build a crypto world that is sustainable

Basically, we need to stop pretending that tokens are the answer to all our problems, and start realizing that they are often the source of them.

Only then can we truly unlock the potential of blockchain, and create a world that is truly revolutionary, not just in theory, but in practice.

Is that likely to happen? Sadly, no. Psychology and greed can often be so predictable.

Most people reading this who’ve profited off airdrops and token speculating probably hate suggesting stopping the gravy train.

Everyone is here to make money and so we play the game that's dealt to us.

The world is often not black or white but a curious shade of gray.