1. Structural Power and Legal Asymmetry

The consistent underperformance of protocols utilizing a dual equity-and-token structure is primarily driven by a fundamental fiduciary and legal conflict. In these models, the parent company’s directors have a statutory obligation to maximize value for equity shareholders, often at the direct expense of token holders who lack similar legal protections or claims on revenue [Source: https://variant.fund/articles/tokens-versus-equity/].

1. Structural Power and Legal Asymmetry

The relationship between equity-backed companies and their token holders is characterized by a significant imbalance in rights and recourse. While equity holders possess statutory voting rights and audited financial transparency, token holders often participate in "governance theater" with no legal standing to sue for breach of duty or audit off-chain revenue [Source: https://scholarship.shu.edu/law_review/].

2. Regulatory-Driven Value Decoupling

To avoid being classified as securities, many protocols have been forced to decouple their tokens from the underlying business's success. This "Walk Away" strategy often leaves the token without a clear economic driver while the parent company continues to capture value through institutional partnerships and off-chain activities [Source: https://variant.fund/articles/tokens-versus-equity/].

Furthermore, founders have historically been discouraged from holding tokens on their balance sheets to mitigate regulatory risk, further aligning their personal wealth with equity performance rather than token price appreciation [Note: not independently confirmed; broader principle supported by Variant Fund].

3. The "Fundamentals Gap" in Market Performance

Recent data from 2025-2026 highlights a growing disconnect between network usage and token value. Despite growth in Total Value Locked (TVL) and daily activity across various ecosystems, native tokens have frequently posted flat or negative returns.

• TVL vs. Price: 7 out of 8 selected ecosystems recorded TVL growth, yet almost every large-cap Layer-1 posted negative or flat yearly returns [Source: https://www.coindesk.com/research/].
• Value Capture: Off-chain value, such as bank interest and business relationships, cannot be directly owned or controlled by token holders, leading to what researchers call "The Broken Token Problem" [Source: https://variant.fund/articles/tokens-versus-equity/].

4. Information and Valuation Asymmetry

Token holders are systematically disadvantaged by valuation frameworks like Fully Diluted Valuation (FDV). These frameworks embed future unlock dilution into the initial launch price, meaning retail holders often buy at a structurally overvalued entry point relative to the actual circulating supply. This is compounded by the fact that equity investors may exit via private secondary sales or early unlocks before retail holders have similar liquidity [Source: https://variant.fund/articles/tokens-versus-equity/].

Conclusion

Protocols with both equity and tokens underperform because they attempt to serve two masters with conflicting interests. The legal primacy of equity ensures that whenever a choice must be made between shareholder profit and token holder value, the shareholder wins. Research suggests a shift toward the "One-Asset Model," where all value accrues directly to the token, or a model where the company acts strictly as a service provider rather than the protocol owner.

Missing Data: Direct comparative performance data (e.g., Sharpe ratios) specifically comparing dual-structure vs. single-structure protocols remains limited in the current research set. Evidence quantifying the exact impact of governance capture on specific unlock schedules is also currently unresolved.