The Decentralized Science Playbook

A new path for the future of biotech

We believe the future of biotech will look far more radical. Radical in terms of how much we can improve health, increased healthcare network effects, and how much value can accrue to non-traditional/consumer bio companies. Decentralized science (DeSci) will be part of this vision because it enables:

• Rapid access to capital

• Global coordination to solve cold start data collection problems

• Novel engagement through gamification of science (livestreamed experiments, prediction markets, etc.)

• Larger, more diverse teams

• Larger capital pools, less founder dilution

• Faster iteration cycles with engaged communities providing real-time feedback

• More creativity

• Multi-layered moats: scientific + community + brand + liquidity

Decentralized science (DeSci) has already demonstrated its ability to quickly capitalize underserved research areas such as women’s health, long COVID, rare diseases, quantum biology. In the near future, we think DeSci has a place in mainstream science too, competing in the hottest indication areas AND forging new ground into areas we haven’t even conceived yet.

This isn’t to say DeSci is a panacea. The science has to work, creating community network effects will take time even with token incentives, and DeSci token valuations are uniquely beholden to crypto macro trends. However, we find this space is still largely under-explored, especially by people in traditional biotech companies, academia, and pharma.

We wrote this playbook to bridge the initial zero-to-one gap in building in DeSci because we do think it enables ways to solve some of the hardest data, coordination, and funding problems in biotech. Afterall, the steps to start a new DeSci company are simple and we’ll take you through each of these steps and their nuances below.

1. Figure out idea/area of focus

2. Figure out a financing mechanism (private capital or token launch)

3. Pick incentivization structure for the community based on involvement

4. Do experiments/work and get to minimal viable data package

5. Launch token to fundraise “growth” capital if you choose to wait

Compound notes on company building

While this piece is broadly about why people should build in decentralized science (DeSci), we want to say that the same theories on “traditional” company building apply to DeSci.

At Compound, we study companies, how they grow, the cultures they create, and try to best help founders through their process of company building. Whether building in crypto, robotics, biotech, or AI, we see core themes emerge across many types of successful companies. As a firm, we’ve written about this extensively on inflection points, narrative cycles, our fandom of full-stack companies, and moat building based on integrating multiple technologies.

In general, we have seen building the most ambitious versions of companies, layering multiple technologies, and going after new customers is a way to build both technical and distribution moats. If companies successfully weather this long and difficult path, they have potential to breakaway from competitors, becoming the de facto and defensible leader in a space. We call these companies Schelling Points, where the name of the company becomes synonymous with the vertical. Presently, Molecule/BIO protocol is the DeSci Schelling Point company¹.

While many companies try to copy narratives and paths of others that have raised large sums and closed large scale commercial contracts, it’s important to understand that every successful generational company is, by definition, an n-of-1 organization. We always encourage founders to lean into what makes them, their vision of the future, their team, and their brand unique vs. what’s the same. This is true for both traditional companies we’ve partnered with as well as crypto-specific companies where we look for similar, category-defining companies.

Company formation in biotech and crypto

Traditional scientific (TradSci) startups followed a centralized corporate governance structure with clear management hierarchies. In many cases this is true for crypto-native projects as well, though sometimes there is an overemphasis on early decentralization, for the sake of decentralization. We think this is a mistake.

Historically, crypto has over-indexed on decentralizing as quickly as possible, which in our view leads to sub-optimal outcomes. Decision-making, especially at inception and the earliest stages of company formation, should be centralized with the core team. These are the experts, these are the people who understand the problem set best and have the vision for solving this at-scale. There is a lot more to say on the benefits of this approach, but suffice it to say that progressive decentralization makes sense only insofar as the project is maturing and there are tangible benefits to broader community involvement. Look across the crypto landscape and you’ll see the teams that ultimately reach a scale of distribution that makes decentralizing additive, are those led by benevolent dictators or small core teams.

Founding teams should maintain strong initial control before gradually transitioning authority to a larger network of participants (or scientific community). Another softer advantage of this model is that teams can use token ownership as a lever for contribution. Rewarding specific behaviors or actions that will meaningfully contribute value to the network allows the project to involve a wider, and often global, set of participants that might otherwise never have been able to contribute. This has meaningful benefits. Token ownership typically reflects ongoing contributions rather than simply an initial capital investment and it allows scientists to increase their stake by continuing to contribute. It also allows for more flexibility as the types of behaviors or outcomes you’re looking to incentivize inevitably change over time.

Find cofounders in their native environments

Don’t be afraid to start a company with someone with a vastly different skillset. Biologists - hit up your friends that are in crypto. If you don’t know any, look at the DeSci Discord channels and start meeting folks there that have been helping those projects. Maybe contribute yourself to see how the projects work. Or ask us to connect you.

DeSci Landscape by @UltrarareBio

For those coming from the crypto world, don’t be afraid of biology. It’s not that hard! In a world where anyone can use LLM’s to get up to speed on different areas, learning is easier than ever. Not only this, but there’s a pretty accurate ledger of publications with people just as obsessed with longevity, muscles, hormones, skincare as you are. While professors are unlikely to leave their positions, directly reaching out to students on key publications could help you find the right people quickly.

OK, you might have someone that complements your skillset AND is equally inspired about this area (fungi, longevity, decentralized clinical trials, etc) as you are. What you do next is get really real about your ambitions for the company, how you want to divide labor, what your financial situation is, etc. There are many questionnaires which are signposts for the types of questions and conversations you should be having with your potential cofounder. When speaking to potential co-founders, you have to align on the type of company and culture you want to build, what you think the most important parts are, and division of labor as co-founders. With that, building in DeSci has added complexity around tokens, distributed governance, long-term incentivization which require more thought and discussion than traditional companies. (More on tokens and long-term value capture below.)

We really like multidisciplinary teams because they can help encompass all the skills needed to be maximally advantaged in building in their area. We’ve already seen success stories of founders who were building or working within traditional technology or finance companies and decided to dive into crypto. Doug from Livepeer, Lucas from Jito, Jeff from Hyperliquid are all great examples of those with a vision for how new-age company-building can be done.

Capital raising for DeSci vs. TradSci

The path for TradSci companies normally involves a mix of venture and government funding mechanisms over the first 1-3 years of company development. With these rounds, founders exchange equity in their startup for investment capital. We’ve seen these financings range from sales of 10-70%² for $1-15M in investment.

Often with these financings there are stipulations about company governance where investors seek to be on the board of companies, have information rights, etc. The execution of the transaction normally happens via a simple agreement of future equity (SAFE) or convertible note, or in larger rounds, a priced equity sale round which carries more overhead legal costs but has a variety of benefits.

In DeSci, initial rounds are similar in size and normally include some equity in the parent company and token warrants. It’s important for both founders and investors to have a shared understanding of where they think value will accrue and negotiate accordingly³. For the most part the default assumption is often that value will accrue to the token over the long-term, and we’re seeing projects design new structures that look to eliminate any ambiguity here. That said, the initial investment is typically executed through a SAFE + token warrant structure, or a simple agreement of future tokens (SAFT’s). As the regulatory picture becomes rosier for crypto, we think it’s both advantageous and probable that legal structures continue to evolve.

It’s not too little to only have an idea when you raise the first round - just make sure it’s the core place you want to spend the next decade and can back it up technologically, commercially, and in the context of regulations. As there’s more academic cuts, we predict earlier stage founders starting companies and using venture funding to get the core scientific de-risking (what we call the venturification of research) will increase.

On token launches

Some DeSci projects launch a token right away, in which case you can trade it like you do a public market stock. The BIO Launch Pad has been the most notable and active executing these with many more to come. We think this is an interesting and valuable way to solve the cold-start problem of fundraising. You can think Day 1 token launches as a Kickstarter for crypto companies, where those contributing actually own part of the company in the long run. This model introduces the double-edged sword of early liquidity (more on this below), which in a lot of cases will attract a very mercenary community that looks more like traders/speculators than those interested in the long-term durability of the project.

If you don’t have a token from the very beginning, there are ways that crypto has distributed funding and community buy in. There are companies that specifically enable crypto crowdfunding like GitCoin, Giveth, WeFunder, Juicebox, Coinstarter, and others. We find the use of quadratic funding especially interesting where many small donations have larger power in funding matches than many small donations. Intellectual property (IP) NFTs are another option where you can fund projects before a company is formed around them. Both these and quadratic funding help the cold-start problem for science funding and could be used to execute a killer experiment that gives founders confidence to fully start a DeSci company.

While it’s hard to speak in generalities, we think starting with a SAFT or SAFE + Token agreement gives the company a lot of optionality. Specifically, we think building the company toward an inflection point before launching a token can help reduce some token volatility and help the company with price discovery after they’ve unlocked something big.

Token launches add another layer of complexity around company building. The central question is whether they’re Pre-Product Market Fit (PMF) or Post-PMF. We highlight some core benefits and risks here.

Benefits and perils of liquid tokens pre-PMF

Token launches can be used to raise money (or retroactively reward network participants) and ultimately act as a price discovery mechanism earlier in the company lifecycle. Just like public companies allow investors the ability to buy a certain amount of their business, tokens allow you to do that much earlier in company development.

This is a double-edged sword.

On the one hand, you have more flexibility and creativity for designing your token to incentivize the behaviors⁴ that optimize the long-term growth and health of the company. There is often less dilution for founding teams too given the earlier liquidity and fewer number of dilutive fundraising rounds.

However, the flip side of this is that teams are far more susceptible to market volatility both due to fundamental reasons (, i.e. when you have a freely tradeable token you are constantly reminded of how the market views you) and broader market reasons (all of crypto can sell off at once, regardless of how your animal data looks). In some ways this can be distracting if the team shifts too much of their focus toward short-term decision-making that supports the token. Ignorance can be bliss when you are a private company without a 24/7 tradeable instrument, which can lead to annoying speculative traders pinging founders multiple times a day about the token price.

We of course believe that the best teams have grand ambitions and intend to be building on 5, 7, 10 year time horizons and thus think the drawbacks sometimes outweigh the benefits of launching tokens too early.

Token risk mitigation

There are some ways the risks can be mitigated. Companies and investors can have long lock-up periods where they’re not able to trade tokens for X years, thus aligning long-term incentives⁵. We are very opinionated about this being crucial for companies which have early token launches.

Another mechanism to ensure that your token doesn’t quickly lose value when it launches is to buy back and burn (or lock) tokens with any funding/revenue/fees you have coming in. Binance was one of the first projects to do this but many projects such as Hyperliquid, Jupiter and AAVE now implement a version of this mechanism. Buy back and burn does have some shortcomings such as not creating intrinsic value and can lead to liquidity issues. There are alternatives that can be used independently or in combination with buy back and burn that are more additive. Buying back tokens can be value accretive if they are ultimately used to either incentivize immediate actions, fund new projects, hire talent, or are kept in the treasury for reinvestment as needed. Staking is another alternative where crypto projects incentivize users to lock up their tokens in a smart contract for a specified duration, incentivizing long-term holders, and help secure the network through proof-of-stake networks.

Going deeper on equity and setup

You now know about SAFE+Tokens and SAFTs being the mechanisms startups can use to get funded in DeSci. As you progress through the next stages of the company, there’s nuance in how you continue financializing the company through tokens. While traditional scientific ventures often run into the “valley of death” between academic grants and venture capital, crypto mechanisms can bridge this period. Liquid tokens can act as ongoing capital, and projects can sell small amounts progressively to fund ongoing operations or specific trials without separate venture funding rounds. After all, value normally accrues to the token so it’s important to have a view on how this changes over time and what the heuristics are for the field. A crude example of what this looks like in practice includes:

• Token Allocation Structure: The founding team typically retains some percentage of the total token supply (10-25%) which usually doesn’t dilute meaningfully in subsequent fundraising round

• Treasury Reserves: Projects often reserve a share of tokens for the protocol’s treasury, which is ultimately governed in a decentralized way over time. Importantly, we think maintaining centralized decision-making is crucial in the earliest stages as the founding team will be in the best position to make decisions in the long-term interest of the protocol/project. However, over time it is common to see the treasury assets governed in a more democratic or specialized manner.

• Protocol Revenue Streams: Generating meaningful revenues is often a later-life-cycle variable but for protocols, the token model can allow the project to earn revenues through protocol fees (in some cases) which grows the treasury and ultimately gives more optionality as the project scales. This stage of a company’s life is where we frequently see the “distribute rewards/capital vs. re-invest in growth” debate surface.

• The two most attractive ecosystems to build on in our view are Ethereum and Solana, each for different reasons. Much of this has to do with liquidity, mindshare and user activity. One of the common traps we see early-stage teams fall into is accepting grants from networks that don’t have users and the product never has a chance to get off the ground. This is not to say other networks don’t offer value, but we believe there must be some fundamental or existential reason (usually technical) to build elsewhere.

Long-term value creation

As we mentioned in the beginning, whether you’re building crypto, biotech, or in between, there’s core philosophies to company building we have seen work time and time again. We think companies should obsessively plan and strategize around inflection points, near, middle, and long-term.

The two year inflection points are crucial as you likely need to fundraise or launch a token in that time period, and ideally do so from a position of strength. The 10-year vision is equally crucial as you want to make sure you, your cofounders, first hires and investors are working towards the same vision of the future. The more you have proven though, the easier fundraising will likely be so make sure you understand this.

Related to inflection points are company moats. Moats can be scientific progress, progression through regulatory hurdles, hiring excellent talent, and making money. For better or worse, the only two long-term moats we’ve observed in crypto today are liquidity & brand. Liquidity for obvious reasons insofar as many of the largest crypto companies today are alternatives to the existing traditional financial system. It’s not surprising to see power laws emerge in this case.

Brand is the other type of unique moat we’ve seen built and defended where we observe users pay meaningfully more to execute transactions through protocols that are largely identical, simply because of the perceived brand value. This is perhaps not surprising and is the most credible argument against the idea that open-source projects cannot inherently capture value. In crypto especially, brand building is not treated as a second class citizen; our belief here is that founders realize while crypto boasts a captive audience, it’s critical to continue engaging this group so that they feel (and are) part of the network growth along the way.

More moats for DeSci companies

What’s exciting about DeSci specifically is that beyond these existing moats of brand and liquidity, there are real scientific, regulatory, legal, and commercial moats that can be established. Our belief here is that it won’t be enough to build great technology in DeSci and that these other factors layer short term ability to sell products and long-term defensibility. In reality, a team who appreciates this and is able to activate its community about how scientific, regulatory, and commercial differentiation is leading to more access to capital and world-class talent will have a materially higher chance of success. The capital moat is especially important in DeSci projects as biotech is uniquely expensive, with small clinical trials costing $5M+. Although DeSci is coming up with mechanisms to decrease friction and cost of proving out technologies, we’re assuming the average DeSci company will be at least doubly capital intensive than DeFi companies, if not more.

Another, though fleeting moat is to capture mindshare by doing *new* things. We think there’s way more potential for more livestreaming experiments, doing decentralized experiments on hormone maxing (testosterone and progesterone), betting on experimental outcomes, creating biobanks of consumer samples, and so much more. Events such as the Sperm Races show there’s at least 100k people that want to watch biology in action. While superficially, it’s a silly and irreverent event, what it shows is that there’s appetite to gamify the biological process. We can see DeSci communities pushing more on the gamification of biology to make it fun and bring in increasingly larger audiences. After all, projects like Folding@Home which used citizen scientist compute power to computationally model proteins were able to achieve six orders of magnitude longer simulations. Imagine if these participants were incentivized and rewarded how much bigger the project could have been.

We realize this is a lot to think about. However, we want to distill what we’re saying with short, medium, and long-term moats.

DeSci Moats over time

Short-term moats

• Novelty & Attention: Running new kinds of experiments (e.g., livestreamed biology, gamified science events like “sperm races”) can capture outsized attention and community mindshare before competitors enter.

• Community Engagement: Early adoption incentives (airdrops, points, bounties) help bootstrap participation.

• Liquidity Access: Early token liquidity itself can act as a moat by attracting contributors who seek immediate upside.

Medium-term moats

• Data Networks: Projects that incentivize collection/sharing of high-value datasets (biobanks, rare disease registries) can build defensible network effects.

• Reputation Systems: Community-driven peer review, contribution credits, and governance participation build switching costs.

• Technical Differentiation: Integrating crypto-native mechanisms (quadratic funding, IP-NFTs, staking) with real-world science workflows can create a defensible stack.

• Capital Moats: Ability to continuously fund through tokenomics (treasury reserves, protocol revenues) reduces reliance on dilutive VC.

Long-term moats

• Liquidity & Brand (Crypto-native): Just like in DeFi, DeSci projects that dominate liquidity and build trusted brands become Schelling Points.

• Scientific Breakthroughs: Validated IP or therapies developed within the DAO/company can lock in long-term advantage.

• Regulatory Approvals: Clearing scientific and legal hurdles (e.g., IRB approvals, FDA pathways) creates barriers for competitors.

• Institutional Partnerships: Partnerships with universities, hospitals, or pharma strengthen credibility and lock in distribution.

• Talent Magnetism: A strong mission, funding, and track record attract the best scientists and builders over decades.

Comparison to therapeutics

• Therapeutics (TradSci): Moats are typically built through patents, regulatory exclusivity (e.g., FDA approval gives 7–12 years of protection), and capital intensity. The moat is IP- and regulation-driven.

• DeSci: While patents and regulation still matter, additional moats can come from community ownership, token-aligned incentives, and liquidity. Unlike therapeutics, DeSci moats are multi-layered: scientific + crypto-financial + cultural.

• Hybrid Models: A DeSci project might combine both such as tokenizing an IP-NFT that represents a patent-backed therapeutic, aligning global communities to accelerate trials while also holding traditional legal protections.

While this seems daunting, we want to reiterate that the good thing about working and building in crypto is that you only need a company kind of working in order to be priced at a maximally ambitious version. This means that if you build in DeSci, you could have less dilution over time and have a higher terminal valuation for the company⁶.

Case studies of why to build in DeSci

DeSci is a great place to fund underserved and non-consensus areas. Looking at the BIO Launchpad, it’s clear that they’ve found their wedge for the perfect initial use-case. Women’s health, long COVID, rare disease, and quantum biology are just a few areas that have been funded to the order of $1-8M off the bat because of token launches. There are many more places people can build such as biosecurity, dermatology, and human optimization spaces, to name a few. Some crypto projects to study and inspire include:

• DAO-Led Therapeutic Development: HairDAO⁷ coordinates patients and researchers to develop new treatments for hair loss. This is innovative because it bypasses NIH blind spots and accelerates translation in underfunded indications via off-label use of approved drugs.

• Tokenized Research Communities: ResearchHub rewards peer review and scientific contributions with $RSC tokens. This works/could work more in the future because it aligns incentives for reviewers, increases speed and quality of knowledge sharing.

• Data-for-Tokens Exchange: GenomesDAO and GenoBank users contribute genomic data and are compensated in tokens. This is interesting because it unlocks rare and distributed datasets, while ensuring contributors retain ownership.

• Token Launchpad for DAOs: BIO Launchpad (Molecule/BIO protocol) has helped raise millions via token launches for projects like women’s health, long COVID, and quantum biology. It’s useful because it provides liquidity and early ownership to global contributors.

• Prediction/Perception Markets on Research: Pump.Science and Stadium.Science integrate the gamification of leveraged trading/prediction markets to science and health experiments. It’s valuable because it harnesses collective intelligence and gamifies science forecasting.

DeSci could become the optimal place to build

However, we think DeSci also has a place in mainstream science. In the future, DeSci might be the optimal place to build a business even if you are building in the most competitive places such as obesity, immunology, and neurology. What makes us bullish on the future of obesity is that DeSci can solve cold start problems in data collection and incentivization. We’ve seen this incentivization and ultimate rich reward happen with Helium, weatherXM and other DePINs.

There is much to say about crypto, but some of its strongest powers are global coordination, behavior incentivization systems, and collective ownership. This is important because we see crypto as a way to reverse cold-start problems. We’ve seen this in small ways where DeSci DAO’s reward community members for anything from literature reviews to direct contributions. These are called “bounties” and people can bid on them and be paid in the token that accrues value.

But really you can reward any behavior - building/adding tools or pipelines, contributing lab resources and/or equipment, running experiments, validating experiments, incentivizing data collection, designing and documenting new protocols, setting up decentralized storage and retrieval systems, running community events, moderating Discord channels, recruiting new scientists, patients, or citizen participants, rewarding sourcing and closing of new partnerships, and so much more. All of the difficult parts of building companies end-to-end, the number of active members, and thus expertises and data sources, can be much larger from the beginning. They can also be more diverse if needed. One of the great benefits of open permissionless networks is that reaching a global audience has never been easier.

For people coming from traditional science, the new terminology of companies⁸ and funding structure⁹ plus the history of a whole new financial organization of crypto can seem unwieldy. (We’ve included an appendix of crypto terms at the bottom of this article). While building in DeSci does take a bit of a learning curve to get up to speed, there are real benefits to understanding this field. And though there is some (mostly) unnecessary jargon, the underlying technology is quite simply more programmatic code with potentially deeper pools of more value-aligned capital. In our view, the technical lift and learning curve to go from 0-to-1 is less daunting than it seems and the advantages the space offers are worthwhile and under-explored.

New structures for creativity maxxing

While there is ~$24 billion in spend in biotech venture capital, the constraints of that capital are pretty severe. Most goes towards funding therapeutic platforms and now traditional diseases such as oncology, metabolic, and autoimmune disease. This is great for researchers turned entrepreneurs in these spaces and for patients that still have subpar options. However with biotech’s index fund, $XBI, at a 10-year flat rate the increase in technologies and medicines isn’t translating to broad biotech success.

Beyond solving the cold-start problem, the other obvious advantage crypto possesses that many in the traditional science space lack is capital access and liquidity. Bitcoin is a bit of a snowflake but for context, its $2.32 trillion market cap today dwarfs the biggest pharma company in history by three-fold (Eli Lilly; $723 billion). Beyond Bitcoin, there are a handful of smart contract platforms valued at north of $50bn that are ripe for novel applications to be built on top of, and a deeply experimental user base willing to try new products.

Reach out to shelby@compound.vc and smac@compound.vc to speak more about your ideas here!

Thanks to Michael Dempsey for your work on this piece.

Appendix: Glossary of Crypto Terms

Airdrop

The distribution of free tokens to early users, contributors, or community members as a way of rewarding adoption or bootstrapping growth.

Block Explorer

A tool for viewing blockchain activity such as transactions, token transfers, wallet balances, and contract interactions. Examples: Etherscan (Ethereum), Solscan (Solana).

Blockchain

A decentralized, distributed ledger technology that records transactions securely and transparently across a network of computers.

Bounties

Task-specific rewards (usually in tokens) for completing predefined contributions such as reviewing a paper, analyzing data, or building a tool

Brand (in crypto context)

The perceived trust, credibility, and cultural recognition of a project, which often influences user behavior even when alternatives are technically similar

Bridge

A protocol that connects two blockchains, enabling tokens or data to move across ecosystems (e.g., Ethereum to Solana).

Buyback and Burn

A mechanism where a project repurchases its own tokens from the market and destroys them, reducing supply and (in theory) increasing value of the remaining tokens

Buyback and Make

A variation where repurchased tokens are reused for purposes such as funding projects, rewarding community members, or held in treasury

Consensus Mechanism

The method by which blockchains agree on the validity of transactions. Examples include Proof-of-Work and Proof-of-Stake.

Credits (pre-token)

Interim points or credits given to contributors before a token launch, later convertible into the project’s token

Custodial vs. Non-Custodial

Custodial systems hold assets on behalf of users (e.g., centralized exchanges). Non-custodial systems allow users to directly control their own assets via private keys.

DAO (Decentralized Autonomous Organization)

An internet-native organization governed by smart contracts and token holders instead of traditional corporate hierarchies

DeFi (Decentralized Finance)

A category of blockchain applications that recreate financial services (lending, exchanges, derivatives) in decentralized, permissionless ways.

DePIN (Decentralized Physical Infrastructure Network)

A crypto-enabled network where participants contribute physical infrastructure (e.g., sensors, bandwidth, hardware) and are rewarded with tokens

DeSci (Decentralized Science)

A movement applying blockchain and crypto-native tools to science funding, collaboration, and ownership

DEX (Decentralized Exchange)

A peer-to-peer exchange where users trade tokens directly via smart contracts, without centralized intermediaries. Examples: Uniswap, Jupiter.

Gas Fees

The transaction costs paid to blockchain validators for processing and securing transactions.

Governance Token

A token that grants holders voting rights over protocol decisions such as upgrades, treasury spending, or fee models.

IP-NFT (Intellectual Property NFT)

A non-fungible token representing ownership rights or licensing to a piece of intellectual property, often used to fund research before company formation

Layer 1 (L1)

Base blockchain protocols like Ethereum, Bitcoin, or Solana.

Layer 2 (L2)

Scaling solutions built on top of Layer 1 blockchains to improve transaction throughput and lower fees. Examples: Optimism, Arbitrum.

Liquidity

The ease with which a token can be traded in the market without significantly affecting its price. Liquidity is often a key moat for crypto projects

Liquidity Pool

A pool of tokens locked in a smart contract to facilitate decentralized trading and lending.

NFT (Non-Fungible Token)

A unique digital token representing ownership of a specific asset, often artwork, collectibles, or rights to scientific IP.

Oracle

A service that connects off-chain data (e.g., prices, weather, research outcomes) to smart contracts so they can interact with real-world information.

Points (pre-TGE)

A temporary system used to reward early platform users before a Token Generation Event; later converted into tokens or used to determine allocation

Private Key

A cryptographic key that grants control over blockchain assets. Whoever controls the private key controls the funds.

Proof-of-Stake (PoS)

A blockchain consensus mechanism where validators secure the network and earn rewards by staking (locking) tokens

Protocol Revenue Streams

Income generated by a blockchain-based protocol (e.g., from transaction or usage fees) that often accrues to the treasury or token holders

Quadratic Funding

A crowdfunding mechanism where the impact of small donations is amplified by matching pools, giving collective power to many small contributors

Retroactive Rewards (Retros)

Rewarding past contributors with tokens or credits once a project has funding, based on the value of their earlier work

Schelling Point

A project that becomes the natural default choice in its category, where users coordinate around it simply because everyone expects others to do the same

Smart Contract

Self-executing code deployed on a blockchain that automatically enforces rules and agreements without intermediaries.

Staking

Locking up tokens in a smart contract for a set period of time, often to help secure a network or earn rewards

Stablecoin

A cryptocurrency designed to maintain a stable value, usually pegged to a fiat currency like USD (e.g., USDC, DAI).

TGE (Token Generation Event)

The official launch of a project’s token, often accompanied by initial distribution to early backers, community members, or the public

Token

A digital asset issued on a blockchain that can represent ownership, access, or participation rights in a project or network

Tokenomics

The design of a token’s supply, distribution, and incentives to align behavior and long-term network growth

Token Warrant

A legal agreement that gives investors the right to receive tokens in the future, usually tied to equity or early investment rounds

Treasury Reserves

Tokens held by a project’s treasury, governed by the team or community, to fund ongoing development and incentivize participation

Utility Token

A type of token that provides access to a product, service, or feature within a blockchain ecosystem.

Wallet

A software or hardware tool that stores private keys and allows users to send, receive, and manage crypto assets.

1. Compound is an investor in MoleculeDAO

2. This isn’t an exaggeration, traditional biotech is incredibly capital intensive and has long readout times so upfront dilution can be extreme.

3. This is admittedly more art than science but in ‘normal’ crypto it’s common to see between 1:1 and 2:1 (i.e. network value equal to the equity or with some slight premium and in the form of token warrants)

4. We’ve witnessed a number of different methods for solving the initial incentive hurdle for participation. In the most financialized example, oftentimes decentralized exchanges will reward users who trade on the platform with “points” to try to source liquidity and activity, before the company retroactively rewards its users during its Token Generation Event (TGE).

5. A common structure is to lock investors for 12-24mo before any tokens unlock and then have them linearly vest over a multi-year period after that

6. Even if your company works, the terminal value is dependent on the chain you’re building on and macro crypto trends. There’s only a few tokens that trade better than their base chains. The ticker of how well you’re doing can be distracting.

7. Compound is an investor in HairDAO

8. DAOs

9. through equity + token warrants