Token Pain

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Crypto’s Curious Crossroad 🛣️

The duality of crypto tokens.

One of the best innovations in modern capital formation, network effects and decentralised consensus — also has a hole. A big one.

We are at a weird point in the crypto timeline.

As posited by Frank Chaparro, Hyperliquid, a 24/7, decentralised, perpetual exchange, has been profiled by massive publications for a surge in oil trading on weekends. When traditional markets are, of course, closed.

Polymarket is continuing to compound its growth.

Stablecoins have breached $300bn in supply.

Polymarket and most stablecoin issuers do not have native tokens. Hyperliquid does.

The traction we’re seeing has not been reflected in markets, however, with many crypto assets are 50% from their all-time highs.

And most, much further away from that.

In June 2025, the crypto market cap hit $4.2 trillion.

It’s down to just over $2.4 trillion in the 9 months since.

And yet, this feels very positive.

We have decoupled from the speculative hyperfixation with crypto prices, and there is demand for actual products. Stablecoins and 24/7 finance on the weekends is not speculative; it’s an upgrade on our financial system. Polymarket and prediction markets have a foot in both waters, but have also clearly found product market fit.

So what is going on?

History doesn’t repeat, but it often rhymes.

And looking at the dot-com bust, prices dropped dramatically from all-time highs in March 2000, 78% down in October 2022.

And yet in that time, internet users went from 400 million to 750 million people.

Usage and speculation decoupled.

And perhaps, that’s exactly what we’re seeing in crypto now.

This comparison fits, but what doesn’t is the value accrual mechanisms that Nasdaq equities and crypto native businesses have.

Currently, we have a few models that have become popular in crypto:

• Equity only: Circle, BitGo

• Equity with a Blockchain: Coinbase, Robinhood, Kraken

• Blockchain with a token, Labs company that coordinates: Ethereum, Solana

• Company/Application/Exchange with a token: DYDX, Magic Eden, The Sandbox

Yet, very few of these tokens have become incredibly successful when they are not connected to infrastructure or a blockchain. And even then, those in the sports, entertainment and gaming space have all had a torrid time in markets.

When Tokens Don't Work 🎮

Mythical Games, the studio behind NFL Rivals and FIFA Rivals, recently made a change to its token strategy.

In-app purchases in NFL Rivals — the mobile game that has hit 7 million downloads — now use stablecoins instead of the native MYTH token, as per Jon Jordan on Blockchaingamerbiz.

This comes at a time when the MYTH token, used as the governance token for the Mythos foundation and Mythos chain, on which Mythical Games builds their games, is down 95%+ in the last 12 months.

A unified token economy across multiple games sounds good in practice. And using the token as the backend payments infrastructure to abstract away the crypto parts for consumers makes sense, but stablecoins do that intrinsically.

So Mythical have adapted. In-app purchases moved to stablecoins, rather than paying in a dollar amount, which is then converted to MYTH token on the backend.

Karate Combat, a successful combat league, has also seen the price of their token obliterated in similar orders of magnitude.

Both of these companies have on paper compelling ideas with strong traction, user growth and retention — but the token has not accrued value.

Part of this can be attributed to market conditions, of course. There are very few cryptoassets that thrive when Bitcoin, the market leader, is not thriving. But that too will change, in due time, just as we have seen the decoupling of substance and speculation in this industry.

And yet, some tokens cannot find a way to accrue value to token holders, reflecting good fundamental business in the market cap.

Enter: Token-to equity buyouts.

Across Protocol, a Paradigm-backed cross-chain bridge, recently proposed buying out all ACX token holders with equity in a new U.S. C-corp structure.

(A cross-chain bridge is basically infrastructure that allows you to port an asset from one blockchain to another)

Token holders above 5 million ACX can convert directly to equity. Smaller holders can participate via a no-fee special purpose vehicle (SPV). Or, they can sell their tokens for USDC at $0.04375 per token — a 25% premium to the 30-day average market rate.

The ACX token jumped 85% on the announcement. A company deciding to go this route is incredibly interesting.

As Across posted on X, why now?

To reiterate, Polymarket — the prediction market that went from $20 million weekly volume to $6 billion — doesn't have a token. All trading and rewards are denominated in USDC. A token may be in the offing down the line, but Polymarket does 5 million transactions daily… having their own blockchain and token for users could make sense here.

Courtyard — the onchain collectibles platform doesn’t have a token, either.

Across, although infrastructure have opened the door to their token holders being part of a more traditional equity structure.

Meanwhile, tokens that launched pre-product or pre-traction have struggled. Founders were convinced by evangelists and VCs that tokenising early meant there was a better chance for them to have liquidity in the future, and ‘reward’ customers.

But that outcome has been incredibly rare outside of blockchain infrastructure.

And even some of that infrastructure is deciding that a token isn’t fit for purpose.

Concluding Thoughts 💭

(1) Do Consumer and entertainment products need tokens?

The apps that have worked in gaming, prediction markets, and collectibles haven’t launch tokens. They launched products that people wanted to use.

If you need a token to incentivise usage, you don't have product-market fit. You have a speculation vehicle.

(2) Pre-product tokenisation is a mistake

A lot of teams convinced themselves that launching a token early was strategic. It created friction they couldn't remove and obligations they couldn't meet.

Mythical had to walk back the MYTH token in NFL Rivals. And they are one of the most successful gaming and entertainment brands in the space.

(3) Tokens are for networks, not apps (right now)

Ethereum, Bitcoin, Solana — these are networks. They need decentralised coordination, validator incentives, and transaction fees paid in a native asset.

But a gaming app? A loyalty programme? A collectibles marketplace? They don't. They need a seamless experience and product market fit.

The mental model teams used was wrong. They looked at Ethereum and thought "we should have a token too." But consumer apps aren't networks. They're products. And products don't need governance tokens.

(4) The Across buyout is a turning point

Across Protocol offering equity for tokens is a structural shift. It's an admission that the value is in the company, not the token.

And as more crypto companies go public — Coinbase, Kraken, and others — the gap between equity liquidity and token utility has compressed. This won't be the last token-to-equity conversion.

I expect we'll see more of these buyouts in the next 12-24 months.

(5) What this means for sports

The tokenisation pitch you heard in 2021 — "launch a fan token, create governance, build a token economy" — wipe that from your memory.

Don't launch a token unless you have a network-level use case. And if you're a consumer app, you probably don't.

Fan tokens haven’t worked, although some market caps have held.

Uptop have shown great promise with their tokenised loyalty programs.

Mythical Games are moving away from the MYTH token, with the most successful sports games in web3 gaming.

Courtyard doesn’t have a token, and neither do Polymarket.

So a sports entity having one, or needing one to build something in this space, is nonsense for the most part.

More Sports & Web3 Stories

• Prediction Market Polymarket Taps Palantir To Monitor Sports Action (Read more here)

• NFL Rivals moving to stablecoin-based Pulse Market (Read more here)

General ‘Stuff’ that Could Impact You

• MapleStory Universe’s winter update adds 96,280 players and boosts transactions 171% (Read more here)

• PIP Labs Sheds Staff as Story Protocol Leans Into AI (Read more here)

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