A protocol can be useful, popular and beautifully engineered while its token captures almost none of the value it creates. We believe that gap, between what a network does and what its token holders own, is the most important question in early-stage protocol investing, and the one most often skipped.
This note sets out how Caldrion Digital Assets thinks about value accrual and supply schedules when we consider early-stage protocol rounds, which we join through SAFTs (simple agreements for future tokens) and token warrants. It is written for protocol teams preparing a round and for advisors who bring them to us. It explains what we look for, why we look for it and why we believe the market is moving in our direction.
Usage is not ownership
In traditional private equity, the link between a company’s success and its owners’ returns is well understood. Shareholders own a claim on the company’s profits, governed by law and corporate documents. If the business grows its earnings, the owners benefit.
Tokens do not come with that link built in. A token may give its holders a share of protocol fees, governance rights over a treasury, the right to stake and earn rewards, a required role in using the network or none of these. Two protocols with identical usage can have tokens with entirely different economics, depending on how the token is designed.
That is why our published criteria include, alongside sector and structure, a specific test for tokenomics: transparent, sustainable supply schedules, and clear value accrual to token holders. We believe those two lines separate tokens that can be underwritten from tokens that can only be traded.
We believe the defining question for a protocol token is not whether the network will be used, but whether holders will own a share of what that use is worth.
What clear value accrual looks like
We do not believe there is a single right design. Different protocols serve different purposes, and the best token designs fit the work the network does. But we look for a clear, explainable answer to the question of how a token holder benefits when the protocol succeeds. In practice, the answers we find most persuasive tend to fall into a few families.
A claim on fees. Some protocols direct part of the fees paid by users to token holders, either directly, through staking or by using fees to reduce supply. Where this is the mechanism, we want to see real fees from real users, not fees generated by incentives, and governance that cannot easily redirect them.
A required role in the network. Some tokens are needed to use or secure the network, so that demand for the network creates demand for the token. Where this is the mechanism, we ask whether the requirement is durable or whether users could route around it.
Governance over something valuable. Governance rights matter when they control something worth controlling, such as a treasury, fee parameters or the direction of a protocol with real usage. Governance over a protocol with no economic activity is a right with little value.
What we look for, above all, is coherence: a design whose logic we can explain in a few sentences, whose incentives align the team, early investors and future holders, and which would still make sense if the token’s price fell for a long period.
Supply schedules: the arithmetic of dilution
The second half of our tokenomics test is the supply schedule. A token’s price is the market’s view of its value divided across its supply, and supply in this market often grows substantially after launch, as team and investor allocations vest and as emissions reward users, validators or liquidity providers.
We believe early-stage investors too often focus on the valuation at which they invest and too little on the supply that will exist when they can sell. A round at an attractive headline valuation can turn into a poor investment if the fully diluted supply is much larger than the circulating supply at launch, and if large unlocks arrive before the network has the usage to absorb them.
So we model supply schedules carefully. We ask to see the tokenomics model, including vesting, distribution and supply, and we look at:
- Total and circulating supply over time, including every scheduled unlock
- Allocations to the team, early investors, the treasury, ecosystem incentives and the community
- Vesting terms, including cliffs, linear release and any acceleration
- Emissions, what they pay for and how long they last
- Any inflation or burn mechanics, and the conditions that change them
We look for schedules that are transparent, so that any holder can model them, and sustainable, so that dilution is matched by growth in the network’s usefulness rather than front-loaded ahead of it.
We believe the best token designs ask insiders to wait at least as long as they ask everyone else to.
Alignment over the long term
Vesting is not only arithmetic. It is a statement of how long the people building a protocol expect to stay, and of how they want their incentives aligned with holders. We look for team and early-investor allocations that vest over a period long enough to see the network through its formative years, and for treasury and incentive allocations that are governed transparently.
Here, permanent capital matters. Because Caldrion’s capital is permanent and free from fixed fund lives, we can respect long vesting schedules without a timetable that forces us to sell when tokens unlock. We would rather accept a longer lockup in a protocol we believe in than a short one in a protocol that needs early holders to leave quickly. We believe that patience makes us a better partner for teams that intend to build for the long term.
The rest of the review
Value accrual and supply are where we start our review of a token’s economics. They are not the whole review. Before we invest in an early-stage round, we also need to be comfortable with the team, the code and the market.
The team. We do not invest in projects with anonymous teams. We want to know who is building the protocol, what they have built before and how the protocol would continue if any one of them left.
The code. We look for an active developer community and audited, open-source code, and we ask for the code repository where it applies. We read audits critically and look at how upgrades are governed and who holds administrative keys.
The utility. Every asset we hold must have a whitepaper we believe in, a codebase we trust and a utility that solves a real-world problem. We want to understand who has the problem today and why they would use this protocol to solve it.
The sector. Our criteria focus on infrastructure, DeFi and scaling: Layer 1 and Layer 2 networks, and consumer and gaming applications. We believe these are the parts of the digital asset economy where durable networks are most likely to be built.
The scale. For early-stage rounds, our published criteria look at valuations of $10M+.
Why we believe the market is moving our way
In earlier cycles, many tokens launched with little attention to value accrual and supply. Demand for new tokens was strong, and early holders could often sell before the consequences of a weak design became clear. We believe those conditions are fading.
As institutional participation grows, more holders are asking the same questions we ask: what does the token own, how will supply grow and how are insiders aligned? Clearer regulation in the United States is encouraging more thoughtful token design and disclosure. And a market that has seen several cycles of heavy unlocks and fading incentives has, we believe, become more discerning about which tokens deserve long-term capital.
We expect that discernment to reward protocols that can give a clear answer to the value accrual question and penalize those that cannot. We believe that shift favors investors who underwrite token economics explicitly, and we intend to be one of them.
Questions we often ask
In practice, our conversations about token economics tend to return to a handful of questions. What share of protocol activity today is driven by incentives, and what happens when they end? Which allocations unlock in the first years after launch, and what usage would the network need to absorb them? Can governance redirect fees or treasury assets, and how hard is that to do? If the token’s price fell sharply and stayed low, would the design still work? Teams that have asked themselves these questions usually give us better answers, and build better tokens.
Preparing a round with us in mind
If you are opening an early-stage round in infrastructure, DeFi or scaling, we would be glad to see it. A complete package includes a link to the whitepaper or technical documentation, a link to the tokenomics model (vesting, distribution and supply) and a link to the code repository, if applicable. Share a link to non-confidential materials (whitepaper, deck or data room); we sign NDAs promptly when there is mutual interest.
The most useful thing a team can do is answer the value accrual question directly, in plain words: when this protocol succeeds, how does a long-term token holder benefit, and how will supply change while that happens? A clear answer to that question tells us more than any amount of narrative.
We aim to give initial feedback within 72 hours of receiving a complete package. Decisions are made by a small internal investment committee that meets weekly. We need no outside approvals and no fundraising to close.
This article reflects Caldrion’s views as of November 2026. It is not an offer of securities or investment advice.