The promise and peril of project coins
In 2025, a new fundraising model has emerged within the crypto ecosystem: project coins — sometimes called product coins, appcoins, or brandcoins. These tokens represent a novel approach to early-stage funding that sits somewhere between bootstrapping, crowdfunding, angel checks, and the "friends and family" round.
Except very different, because investing is open to anyone with an internet connection.
Anywhere in the world.
At any time from launch onward.
With instant liquidity for all involved.
As Splits has continued onboarding builders to Teams, we've noticed that many are working with branded ERC-20s spun up as part of the business. Not coincidentally, this is a burgeoning zeitgeist on Farcaster, the Ethereum-based social network that serves as an ad-hoc incubator of high-signal teams.
Concretely, a project coin is a crypto token affiliated with an ongoing venture, launched by the founding team (or individual). Although project coins may or may not have functional utility, they are different from memecoins:
- Project coins are coupled to underlying substance, not just a standalone idea or joke, not just "lore";
- The creator or team has committed to work on the project for the foreseeable future.
Granted, that commitment varies in its level of formality. Sometimes it is an explicit public pledge, sometimes it is assumed based on the team's ongoing engagement. In either case, the primary enforcement arena is personal reputation.
Project coins are an internet-native fundraising path that exemplifies the internet's tendency to replace top-down gatekeepers with bottom-up demand. Instead of VCs pledging cash, your supporters buy your coin. Launchpads like Clanker make it easy to harvest LP fees, so you don't even have to sell tokens to generate capital.
Incentive psychology
With the advent of crypto, the same structural forces that tore through media and publishing are remaking finance. In a word, disintermediation; authoritative institutions are displaced by engagement-driven algorithms that manifest the collective id in your feed.
Early harbingers were the crazes around memestocks and OG memecoins like $DOGE: finance as fandom. Today's project coins also recall the wave of ICOs and token-issuing DAOs in the 2010s.
Project coins have evolved to mitigate some of the downsides of ICOs (the most prominent of which raised huge sums, then fizzled, delivered late, and/or were smacked down by the SEC). In particular, purveyors of project coins have usually shipped something before the token generation event, though it may be a fraction of their total vision.
What project coins retain from the ICO structure is the bundling of fundraising and marketing. Builders can harness the insatiable appetite for speculation as simultaneous fuel for operational funding and distribution. Crudely summarized:
- interest in product →
- number go up →
- more attention on product, more revenue to build + promote →
- number go up more →
- return to step 1.
This loop is powerful but perilous, posing the risk of audience capture… by the wrong audience. Token price is driven by attention economics; it's easy to end up surrounded by fake "users" who drown out the true signal with hype for hype's sake. God forbid the number goes down — but that's inevitable.
However, with the right audience, the speculators are "true fans": less mercenary and fickle, more like real customers and volunteer business development partners excited to come along for the ride. Token holders benefit from giving good feedback and promoting the project coin ("work for your bags").
Less tangibly but more crucially, active support is a source of belongingness and meaning irrespective of the profit motive.
Capital formation matters
Any ambitious endeavor demands substantial upfront work before generating returns. Dedicated time is needed to transform ideas into reality, and people need money to live.
Project coins are a new means of providing this essential early-stage capital. As such, they are an experiment on the experimentation stack itself, carrying significant implications for all future endeavors in the crypto ecosystem (as did their precursors, ICOs and DAOs).
The ability to efficiently channel capital toward promising experiments ultimately determines which innovations transcend the fragile, rickety MVP and scale to meaningful impact. The value of the project coin model lies not just in funding individual projects but in developing reusable systems for discovery and resource allocation.
Instead of relying on personal connections and pitch decks, founders tap into community capital. As Boost CEO Brian Flynn put it, tokens can "align incentives between users and teams" and act as "a distribution tool to grow faster," in addition to fundraising. Some project coins are directly integrated into the product they represent, acting as "utility tokens" as well as a speculative vehicle. (That is the case with $TIPN, recently profiled on this blog.)
From the investor perspective, project coins offer broadened access to wealth creation opportunities at a point of significant leverage. Jesse Walden of Variant Fund remarked, "capital markets are where the average person can access asymmetric economic upside while economic growth is increasingly concentrated in smaller and smaller technology companies."
Downside: the line between investing and gambling is exceedingly thin, and many players in the crypto ecosystem will encourage inappropriate risk exposure. The 2010s backlash against "fake news," in which mainstream institutions clamored to police online content, is echoed by attempts to prohibit retail from investing in scams.
The cause for concern is legitimate, but most suggested solutions abrogate everyone's right to transact freely. This conundrum remains unsolved and perhaps unsolvable; the tradeoffs are real.
In practice, "democratization of finance" means putting powerful economic tools in the hands of regular people who are not resourced or acculturated like Wall Street bigwigs. It will take time for new protective systems to evolve.
Tokens are not equity
Leaving aside whether any given project coin passes the Howey test, it's important to note buyers do not become shareholders. In part, this is a regulatory sidestep prompted by the punitive measures against ICOs. However, the memecoin-esque untetheredness of project coins does accurately reflect differences in the fundamental relationship.
The roster of project coin buyers cannot be equated with a standard cap table; they are the financial equivalent of social media followers. A project coin is "a liquid representation of the brand that participants can bet on and root for," which may or may not have any other function.
Granted, there is some overlap with traditional stocks. From the trader perspective, project coins are expected to behave similarly to public tickers, rising and falling based on the company's fortunes. The tokens are regarded as vehicles for investing in the underlying project's success.
Given the lack of any legal rights, the relationship between a project coin founder and the buyers is a kind of gift culture, as discussed by Alex Danco, underwritten by reputation and public track record:
In this world of digital abundance where the cost of copying bits was zero, status didn’t come from what you had, but from what you gave away, and the reputation you earned over time from playing repeat cooperative games.
Crypto has already shown us that this mechanism is robust usually, but prone to occasional catastrophic failure. Rugs happen; people decide to burn their social capital and abscond with millions (sometimes more, sometimes less).
Project tokens in particular carry an interesting not-quite-rug variant of the question: Some of these projects will eventually generate excess future cash flows; will token holders be rewarded accordingly? By market price, presumably yes… in the short term. But directly by the team behind the project? We'll have to see.
While tokens are not equity, investing despite a lack of guarantees is not new. Quoting Variant Fund's Jesse Walden again:
investors, especially retail, want to get behind people and ideas who are engaging, and who put numbers on the board. […] where there's higher trust (e.g. high integrity founders, or more economic activity that is transparent onchain) investors can/could get comfortable with more limited rights. in these scenarios, ownership is more to do with economic alignment vs. more classical shareholder governance models.
He compares the dynamic to investors in Meta (including its previous incarnation as Facebook), who know that Mark Zuckerberg doesn't give a damn what they think strategy should be, and structured his company so that nobody can compel him to give a damn. Nonetheless, the stock is attractive.
Project coins are "instruments that principally offer that kind of economic alignment with product growth," Walden continues; "users know the product, and they want to own a piece of it." Even if that ownership is not legally formalized.
The global canvas
Crypto's destiny is remaking exclusive systems to be universally available — a logical extension of the internet itself. Traditional equity markets entail extensive gatekeeping, both legal, logistical, and cultural. Whereas "crypto networks create universal rules of engagement that anyone can plug into, regardless of where they are or who they bank with."
For better and for worse, project coins eliminate legacy barriers. Anyone with an internet connection can participate, whether as a founder or supporter. By contrast, the US stock market remains largely inaccessible to most people and companies worldwide. Even within America, the vast majority of businesses never raise venture capital, let alone go public. Some of them would if they could.
Project coins merge Web2's bottom-up platform dynamics with crypto's introduction of programmable property rights. Builders can now create direct economic relationships with their communities — even while relying on social media platforms to initiate those communities.
Digital ownership is the core feature of the onchain world. Project coins may prove crude in their current form, but they point toward a future where the boundary between builders, users, and investors becomes increasingly fluid. We're witnessing the early stages of truly global capital markets: messy, speculative, and transformative in equal measure.
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Header image: 19th-century banknote motif likely designed by Cyrus Durand.