David Pakman, managing partner at venture capital firm CoinFund, said the cryptocurrency industry still has not solved one of its most important design problems: how to create native tokens whose market value reflects the long-term strength of the networks, applications, or products behind them.
Speaking on a podcast on Tuesday, Pakman said many digital tokens continue to trade more on internet narratives, community enthusiasm, and short-term market attention than on measurable economic performance. That gap, he argued, makes it harder for contributors, builders, and early supporters to decide whether they should accept tokens as compensation or choose more stable forms of payment.
The issue is central to the way many crypto projects are built. Tokens are often used to reward developers, community members, liquidity providers, node operators, and other participants. In theory, those tokens should rise in value if the network becomes more useful or profitable. In practice, Pakman said, many tokens fail to capture that value clearly, leaving holders exposed to price swings that may have little connection to the project’s real progress.
“The challenge is that contributors are often choosing between being paid now and betting on the future,” Pakman said in substance during the discussion. He described that choice as a problem of time horizons. Some participants may be willing to wait years for a network to mature, while others need compensation that can be used immediately.
Pakman suggested that stablecoins could play a larger role in solving that problem. By paying contributors in dollar-linked tokens or other stable digital assets, projects can reduce the pressure on participants to speculate on future token prices. That model, he said, may be especially useful for younger workers and community members who prefer quicker, more predictable outcomes from their labor.
The comments come as the digital asset market is again debating the usefulness of newly launched tokens, the durability of crypto business models, and the impact of pending legislation in the United States. Congress is reviewing the Clarity Act, a bill intended to define parts of the crypto market more clearly and assign oversight responsibilities across federal agencies.
For traders, founders, and policy watchers, Pakman’s remarks highlight a recurring question: if a token does not represent cash flow, governance power, ownership rights, or a reliable claim on network activity, what exactly gives it lasting value?
Why token design remains a problem
Many crypto networks issue tokens before they have a mature product, steady revenue, or a large user base. The token is often presented as a way to coordinate activity inside the network. It can be used for governance, staking, rewards, access, or fees. But the link between those uses and market value is often weak.
A network may grow its user base while its token falls. A protocol may collect fees without passing value to token holders. A governance token may allow voting, but if voter turnout is low or decisions are concentrated among large holders, the token may not feel meaningful to smaller participants.
Pakman said this leaves many token holders relying on market narratives rather than fundamentals. A project may become popular on social media, attract attention from traders, and rise sharply in price. But once attention fades, the token may decline even if the team continues building.
That pattern has appeared across several crypto cycles. During bull markets, new tokens often launch at high valuations on expectations of future growth. In weaker markets, those expectations are tested. Tokens with limited utility, thin fee generation, or unclear rights can struggle to maintain value.
For contributors, the risk is direct. A developer paid in tokens may end up earning far less than expected if the token price falls. A community member rewarded for early promotion may discover that the token’s market value depends more on sentiment than product adoption. A service provider may face the same issue if payment is tied to a token that lacks liquidity or clear demand.
Pakman framed the issue as a compensation challenge, not only a trading challenge. Crypto projects use tokens to attract talent and build communities, but a poor token structure can shift too much risk onto contributors. If workers are effectively paid in an asset that may never reflect the project’s economic success, compensation becomes closer to speculation than wages.
The Ethereum comparison
Pakman referred to his own experience as an early Ethereum miner, saying the ether he earned rose significantly in value over time. Ethereum became one of the most widely used blockchain networks, and ether developed several sources of demand, including transaction fees, staking, decentralized finance, stablecoin settlement, and activity tied to digital assets.
That experience, however, has not been repeated by many newer projects. Pakman said contributors to more recent networks have often been left holding tokens that depreciated and had only a limited relationship to network fundamentals.
Ethereum is often cited as an example of a digital asset with broad utility because ether is needed to pay transaction costs on the network. The network also supports a large ecosystem of applications. Even so, ether itself remains volatile, and its market price can move sharply with broader crypto sentiment.
For smaller projects, the challenge is harder. Many launch tokens before they have strong demand for their product. Others create governance tokens that do not clearly share economic value with holders. Some tokens are distributed widely to encourage participation, but large unlock schedules can place selling pressure on the market over time.
The result is a difficult balance. Projects want tokens to help grow networks and reward early supporters. But if the token becomes disconnected from actual usage, it can damage trust and make future contributors less willing to accept similar compensation.
Stablecoins gain a larger role
Pakman’s suggestion that contributors could be paid in stablecoins reflects a wider trend in digital assets. Stablecoins have become one of the most used products in crypto because they offer a way to move dollar-denominated value on blockchain rails without taking direct exposure to the price swings of Bitcoin, Ethereum, or smaller tokens.
Fresh public market data from mid-July 2026 placed total stable asset supply at about $316 billion. That figure points to continued demand for blockchain-based dollars and other fixed-value digital assets across global markets. Stablecoins are used for trading, payments, treasury management, remittances, decentralized finance, and as a temporary place to hold value during volatile periods.
Even with that large base, the sector saw a sharp contraction in June, when total stable asset supply fell by about $7.7 billion. That was the largest dollar decline for fixed-value digital assets since the broad market downturn in May 2022.
The drop showed that stablecoins are not immune to market pressure. Their supply can decline when traders reduce risk, redeem tokens, move into bank deposits, or shift capital out of crypto markets. Still, the overall size of the sector suggests that demand for stable digital money remains strong.
For crypto projects, stablecoins offer a practical compensation tool. A contributor paid in a dollar-linked token can cover expenses without immediately selling a volatile governance or utility token. That can reduce stress for workers and make project budgeting easier. It may also help teams separate compensation from speculation.
It does not eliminate every risk. Stablecoins depend on reserves, banking relationships, audits, redemption mechanisms, and regulatory treatment. But for many participants, they are easier to understand than newly issued tokens whose value depends on future network adoption.
Ether.fi and the search for alignment
Pakman also mentioned Ether.fi as an example of a project trying to improve alignment between network value and stakeholder ownership. Ether.fi operates in the Ethereum staking and restaking ecosystem, where users seek to earn rewards from securing blockchain infrastructure and related protocols.
CoinFund has backed Ether.fi, and Pakman linked its governance token structure to broader questions about regulation and token design in the United States. The goal, as he described it, is to create a token model that better connects ownership, governance, and economic activity.
Governance tokens are intended to allow communities to help direct protocols. In many cases, token holders can vote on changes to fees, incentives, treasury spending, protocol upgrades, or partnerships. But governance only has value if the underlying system has activity worth governing and if the voting process is credible.
The crypto sector has struggled with this issue for years. Some governance tokens have large market capitalizations but limited voter participation. Others are controlled by early backers, founding teams, or large holders. Some protocols distribute governance rights but avoid giving token holders direct claims on revenue because of legal uncertainty.
That uncertainty is one reason U.S. legislation matters. If lawmakers create clearer categories for digital assets, projects may have more room to design tokens that reflect real economic participation without violating securities laws. If rules remain unclear, teams may continue issuing tokens with limited rights, leaving the market to value them mostly on expectation and narrative.
The Clarity Act and regulatory pressure
The Clarity Act, currently under review in Congress, is aimed at creating clearer legal definitions for crypto markets and assigning oversight roles to federal agencies. The bill is being watched closely by blockchain companies, legal advisers, traders, and venture firms because it could shape how tokens are issued, traded, and supervised in the United States.
Supporters of clearer legislation argue that the current regulatory environment has pushed many projects into uncertainty. They say teams often do not know whether a token will be treated as a security, a commodity, or something else. That uncertainty can affect product design, exchange listings, disclosures, governance rights, and how value flows through a protocol.
Critics of lighter regulation argue that many token launches have harmed the public by promoting assets with weak fundamentals, poor disclosures, or insider advantages. They say stronger oversight is needed to reduce speculation-driven losses and improve transparency.
Pakman’s comments sit between those concerns. He did not frame the problem only as a legal issue. He described it as a structural weakness in the way crypto networks reward participation and express value. Regulation may help by creating clearer boundaries, but token design itself still has to improve.
Market participants are already preparing for a more rules-based environment. If Congress sets clearer compliance timelines, trading activity could shift toward tokens with stronger disclosures, real user demand, visible fee generation, and more transparent governance. Tokens that rely mainly on social media momentum may face more pressure.
A market moving beyond hype
The broader market appears to be separating crypto assets into clearer categories. Bitcoin is widely viewed as a scarce digital asset. Ether is tied to the activity of the Ethereum network. Stablecoins are used as blockchain-based cash. Tokenized funds and real-world asset products are designed to connect traditional financial instruments with blockchain settlement.
The weakest category may be the large group of tokens that promise future utility but do not yet show strong present-day demand. These assets can still rise during speculative periods, but they are vulnerable when sentiment fades or when traders demand evidence of real economic value.
Pakman’s warning is that the industry cannot rely indefinitely on that model. If builders, developers, and communities lose confidence that tokens will reflect project success, they may prefer stablecoin payments or traditional cash compensation. That would reduce the role of tokens as a tool for bootstrapping networks.
At the same time, strong token design could still be important. A well-structured token can coordinate users, reward participation, decentralize control, and give communities a stake in a network’s future. But to do that, it must be connected to something durable: usage, fees, governance power, access, security, or another clear source of demand.
Founded in 2015, CoinFund has backed companies and projects including World, Superstate, and Ondo. Pakman continues to lead the firm’s venture strategy at the intersection of digital assets and technology startups.
His latest remarks reflect a maturing debate in crypto. The question is no longer only whether tokens can rise in price. It is whether they can be designed so their price has a rational connection to the value being created underneath. For traders and builders alike, that distinction may become more important as stablecoins grow, regulation advances, and the market becomes less forgiving of tokens built mainly on hype.
Explore how regulation may reshape stablecoins and contributor payouts in 2026—read why 2026 could redefine global stablecoins.
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