Ownership Coins
Overview
Most tokens do not give holders meaningful ownership. The team controls the treasury, intellectual property, and a large share of supply. Tokenholders have little recourse if founders shut the project down or leave with its funds.
Ownership coins work differently. The valuable parts of the organization—intellectual property, treasury, mint authority—are controlled by decision markets.[1] Legal documents and smart contracts enforce that this is the case. Teams must work to create tokenholder value or risk getting ousted by the markets.
There's no legal document saying that tokenholders own anything. But decision markets protect you from poor or biased decisions that would tank your tokens. What's good for the token is good for the token holder.
What makes a token an Ownership Coin?
Two things:
- Treasury governed by decision markets: funds sit in a treasury with market oversight, which limits unilateral access by the team.
- Key intellectual property governed by decision markets: social accounts, domain names, software, and other key assets are assigned to an entity with decision market oversight. A team cannot use tokenholder funds to build a product and then move the resulting value outside the governed entity without market scrutiny.
How "ownership" works under decision markets
| Normal ownership | Decision markets |
|---|---|
| Shareholders have a say and can vote | Market price is the decision |
| Shareholders have a contractual claim on residual equity value in the event of a liquidation or sale | Market price is the decision |
| Operators have a fiduciary duty to shareholders (or lienholders, in the case of insolvency) and can be sued for breach of that duty | Market price is the decision |
Even if teams maintain day-to-day control of decisions, they are ultimately responsible to a market that has a good deal of control over the organization. Funds can be withdrawn, operators can be replaced, key assets can be divested all by the market and without the approval of an executive team or board of directors.
[1]: MetaDAO is currently in beta and the MetaDAO team currently has the ability to override decision markets in extreme scenarios, similar to Polymarket’s backdoor into the oracle. We have yet to use this power and expect it to disappear as the system matures.