Author: Matty Compiler: Jiahuan, ChainCatcher

In November 2025, more than 5 years after the $UNI airdrop, Uniswap finally launched the fee switch.

This process has gone through several years of delays and repeated governance games, and even staged an extremely embarrassing scene in 2024: a ‘stakeholder’ (generally believed to be an equity investor) blocked a proposal that was supposed to reward token holders. Despite this, the UNification proposal ultimately passed with more than 62 million votes.

The fact that the largest DEX in crypto has taken so long to figure out how to reward its token holders speaks volumes about the current state of the equity-token relationship. While UNI token holders theoretically “own” the protocol, they can only watch from the sidelines as equity investors capture all the value from front-end fees.

While Uniswap is the poster child for the equity vs. token divide, the issue has been festering for years and affects nearly every protocol that consistently generates revenue. Equity holders and token holders often compete for the same value pool while operating under fundamentally different legal, governance and economic frameworks.

The solutions proposed in the industry range from completely eliminating staking and moving all ownership on-chain, to going to the other extreme and abandoning the token entirely. Both approaches have their proponents, but both also have significant flaws.

Extreme path one: complete de-equitization

Completely eliminating staking and moving all ownership concepts onto the chain is certainly a theoretical solution. In this vision, smart contracts replace shareholder agreements, on-chain balances replace ownership structures, and governance tokens replace board votes.

Instant settlement. Transparent ownership. What's not to like?

One major problem is: Unless a business's assets, operations, and customers are entirely on-chain, the off-chain court system will always be the final arbiter of disputes. You can try to have all your off-chain contracts and agreements reference on-chain logic, but that still doesn’t change the fact that the off-chain courts are the arbiters, and not everything is within your control and can be transferred to the chain.

For example, I could have a tokenized real estate NFT issued by a smart contract that states that I own the corresponding property, but if the off-chain title deeds for that land say something different, good luck presenting your NFT when the Sheriff comes to serve an eviction notice. (Again, you can take steps to try to ensure that off-chain deeds are consistent with on-chain status, but this does not negate the fact that off-chain enforcement takes precedence).

The "no equity, pure token" approach only works for a small subset of projects:

Completely on-chain networks and protocols, such as Bitcoin, some public chains and fully autonomous DeFi. These projects have no company, no employees, no servers, and no external dependencies. After all, that’s the beauty of Bitcoin in the first place! An uncensorable system and an unconfiscatable asset.

But for the vast majority of projects (and the vast majority of potential on-chain activities), this is not feasible. Web2 and Web2.5 companies own off-chain assets, customers, payments, and operations.

Extreme path two: complete de-tokenization

At the other extreme of the spectrum, some projects (actually the vast majority of companies) have decided to abandon tokens altogether. They raise equity, build the product, and avoid all the headaches that tokens can bring—while sacrificing all the benefits.

• Benefits: No tokens means no SEC knocking on your door. Don’t worry about whether governance tokens are securities. There is no need to devise token economics, worry about emissions, or explain buyback mechanisms.

• Price: Giving up instant settlement, transparent ownership records, cost efficiency gains, and the ability to coordinate global community incentives.

Traditional equity transfers are expensive, slow to settle, and inaccessible to most potential investors. Gaining equity exposure in private startups remains expensive, inefficient, and opaque. Even in 2026, the process required to trade public stocks looks archaic compared to DeFi.

Tokens, for all their flaws, have the potential to solve these problems. They enable community ownership and user-owned products. To abandon this completely is a step backwards.

To find the best balance between these two extremes, we need to understand what staking offers that tokens cannot.

What do equity and tokens each offer

1. Legal rights and recourse

When you own equity, you have legal status. You can sue and enforce your rights. If a director breaches their fiduciary duties or commits fraud, you have an established legal framework to recover losses.

Token holders (except in rare circumstances) have few legally recognized rights or protections. They often can only hope that the market will save their investments.

While the entire company's budget could theoretically be placed on-chain, having founders put every decision up to a shareholder vote without legal rights introduces massive operational inefficiencies and defeats the purpose of investing in the first place - trust in the vision and capabilities of the team.

2. Formal governance control

Equity shareholders elect the board of directors, approve major transactions, and have codified rights. In contrast, governance tokens often give the illusion of control.

As Vitalik stated, there are serious flaws in token governance: low turnout (<10%), manipulation by whales, lack of expertise. More often than not, on-chain governance degenerates into “decentralized theater,” where teams can often ignore votes if they don’t like the results because execution still requires manual operations.

3. Legal clarity on value accumulation

In mergers and acquisitions, equity holders have clear legal rights to receive benefits. As recent cases with Tensor and Axelar have shown, token holders are often outright abandoned, even if the project in question is acquired.

Because of this strong legal right to profit sharing, stocks more reliably trade based on multiples of expected future profits. Token valuations are often purely speculative and have no fundamental support.

Even if a project generates revenue, most projects will not reliably route revenue to token holders due to regulatory risks and conflicts of fiduciary responsibilities. While off-chain protocols can be constructed to simulate this right, this is far less reliable than the legal basis of equity.

4. Wider and deeper investor pool

In short, the investor pool and total purchasing power of the equity market is much larger than that of the token market.

• The U.S. stock market alone is worth more than 20 times the value of the entire crypto industry.

• The global stock market is worth more than 46 times the value of the crypto industry.

• 

Projects that choose tokens over equity are actually only exposed to 2%-5% of the potential purchasing power they could have accessed.

2026: The Year of Equity Tokens

One thing is for sure: from tokenized equity to new forms of on-chain governance, 2026 will be a year of innovation and experimentation for equity tokens.

The DTC pilot program (launching in the second half of 2026) will be the first time in the United States that participants will be able to hold interests in tokenized securities on the blockchain. This represents that the infrastructure backbone of the U.S. capital market is shifting to the chain:

• Nasdaq has proposed trading in tokenized securities.

• Securitize provides real public stocks with full on-chain legal ownership.

• Centrifuge and others are tokenizing equity through SEC-registered agents.

The convergence of traditional financial infrastructure and blockchain rails is no longer a pipe dream – it’s happening.

For crypto-native projects, Uniswap’s five-year journey to fee switching is a warning. The split between equity and tokens will not be automatically resolved. It requires intentional design, clear protocols, and structures to resolve conflicts of interest.

Ultimately, this disagreement stems from regulatory uncertainty and the absence of a legal framework. Whether it’s through the SEC’s “Project Crypto” or the Clarity Act, the U.S. is expected to get long-awaited regulatory certainty as early as January of this year.

By the end of this year, we will no longer be discussing equity vs. tokens. We’ll talk about ownership—transparent, transferable, legally protected, and natively digital ownership.