The Principle of Unity in Token Design: From Selling to Retaining

Within five years, a major challenge has continued to dominate the cryptocurrency industry—tokens are designed to foster true unity, but instead create competition and conflicting interests. The principle of unity should be at the heart of any token design, but the current model does the opposite: it encourages people to profit by selling their holdings, not by holding them.

This is not just a technical problem. It’s a fundamental issue that the entire industry needs to solve, and it’s also the direction regulators should support with practical solutions.

Why the Current Token Model Creates a True Zero-Sum Game

Since the beginning of cryptocurrency, we’ve seen the same pattern repeat: a project launches, early backers come in, the team receives a large allocation, and then the doors open to the public. Each step is an opportunity to think about when your competitor should exit.

The problem is simple: when all profits come from selling tokens, every participant is your rival. The team waits for unlock schedules. Early investors watch for the next big unlocks. Users look for ways to exit before it becomes too hard to leave. There’s no real unity—only a race to get the seat.

Mechanisms like lock-ups and vesting schedules don’t solve this problem. They just change the order of who gets what first—and history has shown that insiders are always the first to exit. The game is no longer “how to strengthen the protocol,” but “when should I sell?”

DeFi Leaders Are Starting to Change the Game, But It’s Not Enough

In recent years, projects like Aave, Morpho, and Uniswap have tried to change the game. They integrated tokenholders into governance, brought the team and community to the same table, and tested removing the old separation.

This is real progress. Giving voting rights and governance participation is part of the solution. But it doesn’t yet address the core problem: the incentive structure still encourages selling. Discounted fees, profit sharing with governance participants—these are steps in the right direction, but they’re just changing the form of the same problem.

To truly change, more radical steps are needed: the relationship between the token and the protocol’s actual economic benefits must be made direct and transparent.

The True Model: Profit Sharing and Holder Voting

Imagine a different design: 100% of the protocol’s revenue is distributed through voting by tokenholders. No lock-ups, no complex mechanisms—just direct and transparent.

Here’s how it works: each year, holders vote on how to distribute the profits. Should it be paid out directly as dividends? Or should part be reinvested into product development and sustainability? The decision comes directly from token owners, not the team or venture backers.

If the protocol earns $1 million a year, and holders vote for 70% dividends and 30% reinvestment, you get a clear calculation: each token earns $0.70 annually, while infrastructure continues to grow through the development fund.

There’s no need to think about timing. No race to win. If you buy, dividends pause until you buy again. If you hold, dividends keep flowing. The strategy becomes simple: help the protocol earn more.

The principle of unity becomes real: everyone shares the same goal—strengthen the network, increase revenue, and enjoy the benefits.

Why This Hasn’t Been Possible—Until Now

Two main obstacles have held back this model, and both are gradually dissolving.

First is the problem of “faster money.” In the early days, quick profits from promotion and selling outpaced building real businesses. Who would work long-term for dividends when insider trading and retail upsell could yield 10x returns in months? But that era is ending. Retail investors are smarter, and on-chain analytics reveal every move insiders make. Serious teams recognize that true value lies in long-term sustainability, not short-term pumps.

Second is more serious: securities law. A token that provides direct income to holders appears to be a security under the Howey Test. As a result, many serious teams are afraid to implement income-sharing models, even though they know it’s the better approach. That’s why many protocols use workarounds—buybacks, staking mechanisms, governance rewards—all indirect ways to avoid direct dividends. Not because the design is better, but because they fear regulatory scrutiny.

A third obstacle is technical and infrastructural. Five years ago, implementing fast, low-cost dividend distribution on-chain was impossible due to high gas costs. Today, layer-2 networks and improved smart contract infrastructure have changed the landscape. It’s now feasible.

The Regulatory Window Is Open, But It Won’t Wait

In the past year, the regulatory environment has changed significantly—more than in the previous four years.

In January 2025, the U.S. SEC established a special cryptocurrency task force led by Commissioner Hester Peirce. Her mission is clear: “Set clear regulatory boundaries and provide practical registration pathways for crypto projects.” Peirce herself proposed a “token safe harbor”—a buffer period giving projects time before final classification.

At the same time, the SEC and the Commodity Futures Trading Commission issued a joint statement signaling a unified approach to digital asset regulation. These are not empty announcements—they represent a real shift in direction.

But this window has an expiration date. Midterm elections and shifting political landscapes could change the entire setting. If we wait until the next big token scandal hits, regulators may use those scandals as templates for strict rules—and there will be no room for more progressive models.

Success doesn’t wait. If the industry doesn’t actively advocate for “good token design,” regulators will use “bad cases” as their reference. The narrative will focus on fraud and manipulation, not legitimate economic participation.

The Principle of Unity: From Hype to Reality

Projects like Aave, Morpho, and Uniswap show that deeper alignment is possible. But the real breakthrough will happen when income-sharing becomes standard, not an exception.

This means founders and teams must decide now: the principle of unity isn’t just a nice-to-have—it’s fundamental to long-term success. Tokens designed to align incentives through direct revenue sharing will be a competitive advantage, not a liability.

The paradigm shift is simple but radical: from “how can I see value through selling” to “how can I see value through holding and supporting the protocol.”

Questions Every Founder Should Ask Today

If you’re designing a token, ask yourself:

Are my tokenholders earning through selling the token, or through holding it?

If the answer is “selling,” you’re playing musical chairs—only a few will get a seat, most will lose. Those who can’t hold will suffer permanent losses.

If the answer is “holding,” you’ve created a system where everyone can earn by helping. This is the true aligned incentive that tokens should have.

The transition isn’t easy. The income-sharing model has its own complications—how to define “revenue,” mechanisms for distribution, governance rules. But no matter how complex, it’s a better foundation than the current system.

The regulatory window is open now. The next year is critical. If the industry advocates clear principles about what constitutes “aligned incentives,” regulators will have a smarter template to follow than the scandals of the past.

Change begins with founders deciding to design their tokens with the principle of unity at heart. The time is now—not tomorrow, not after the next cycle, but now. Because the regulatory window, like all windows, can close suddenly.