I’ve spent my entire career poring through public disclosures for public equities, obsessing over the nuances of reporting changes and redlines between consecutive 10-Ks. When I transitioned to digital assets, I found the on-chain data liberating in some ways, while other aspects of disclosure became opaque and detrimental to the rigorous analysis that underpins sound capital allocation decisions.

 

With nearly 500 publicly traded tokens commanding market capitalizations over $100 million each, we’re witnessing the emergence of a new asset class that demands, and deserves, rigorous analytical frameworks. At Pantera Capital, we believe digital asset prices will increasingly trade on fundamentals rather than speculation – in fact, it’s the only logical way forward for this asset class if one believes that it will meaningfully scale. We’ve seen this validated empirically in the market, where on average fundamentally sound protocols with clear revenue models and transparent on-chain metrics outperform. 

 

However, the broader industry lacks standardized transparency and reporting mechanisms that hinder efficient capital allocation. Off-chain side deals, advisory allocations, and opaque market-making arrangements create “phantom tokenomics,” where on-chain data misleads about actual token distribution and economics. While data providers like Artemis, Dune and Token Terminal have emerged to surface existing data, no standardized framework exists by which to judge how protocols should be reporting key metrics, tokenomics, or business fundamentals.  

 

This need is amplified by tokens’ unique market dynamic. Unlike traditional companies that go public after achieving product-market fit, tokens reach liquid markets at venture-stage maturity. This compressed timeline means we cannot simply adapt traditional IPO disclosure requirements – we need frameworks designed for earlier, less developed protocols. 

 

This is why we’re partnering with Blockworks Research on the Token Transparency Framework, essential infrastructure for the industry’s continued maturation. Just as public companies adhere to standardized financial reporting, token-based protocols need consistent disclosure standards. 

 

The framework addresses critical transparency gaps: comprehensive tokenomics including actual allocation schedules, clear breakouts of revenue streams and expenses, reporting of token-related side agreements and advisory arrangements, robust governance documentation, transparent market maker arrangements and exchange listing terms, and standardized disclosure of related party transactions and future token issuance plans. 

 

When retail investors purchase tokens at inflated valuations while insiders benefit from undisclosed deals, market integrity is fundamentally compromised. As institutional capital increasingly flows into digital assets, demand for transparent, standardized information will intensify. We believe the next trillion dollars entering this space will come from institutional allocators trained in fundamental valuation techniques. 

 

The Token Transparency Framework legitimizes tokens as a genuine alternative to traditional equity structures. Many blockchain protocols may never issue traditional equity, instead operating solely through tokens that align incentives among management, employees, investors, and, uniquely to digital assets, users. For this new capital formation method to reach its full potential, it must earn trust through transparency. 

 

Transparency drives institutional capital adoption, delivering lower cost of capital through higher valuations and enabling capital to flow to protocols with superior fundamentals. This starts capitalism’s positive flywheel where more value-creating ideas attract more investment, accelerating innovation and institutional participation. Transparent protocols will capture disproportionate value while opaque competitors face capital constraints. 

 

Protocols that embrace these standards will distinguish themselves in an increasingly crowded field, while investors gain tools to identify truly valuable opportunities. Together, we’re building the foundation for a more mature, sustainable, and valuable digital asset ecosystem.