I’m considering a job at a blockchain startup, which is offering tokens (not yet created or issued) instead of equity. I understand equity, you make money if you get bought out or go public, but I am skeptical of tokens especially now that the crypto-bubble has burst. If the tokens are issued and eventually listed, what are the economics of how or why the price would actually rise? Does anyone have any success stories where this actually worked out for them (with a legit company)? Does anyone know of any good resources on this kind of compensation?
Ask HN: Any success stories with token-based employee incentives?
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Re: Ask HN: Any success stories with token-based employee incentives?
#2Cash is king. Anything else you should consider a heavily discounted lottery ticket.
Re: Ask HN: Any success stories with token-based employee incentives?
#3If you can’t answer these questions without outside counsel, please avoid the scheme being peddled to you.
Re: Ask HN: Any success stories with token-based employee incentives?
#4A useful thought experiment:
How much more tokens/equity/RSU's would you buy if you were paid in all cash? If you could buy them at a discount, how much would you buy?
If you wouldn't buy thousands of dollars of this token if you were compensated completely in cash, you probably shouldn't take the tokens.
Re: Ask HN: Any success stories with token-based employee incentives?
#5Even if it was listed, the most likely outcome would be for the token to lose value. Offering unlisted tokens as some sort of payment just feels wrong to me.
Re: Ask HN: Any success stories with token-based employee incentives?
#6Are they giving tokens _instead_ of equity? Insist in getting equity, that's a third of the point of joining a startup. Sure, add crypto-tokens to the mix. But tokens instead of equity… pardon?
Re: Ask HN: Any success stories with token-based employee incentives?
#7Many people advise that shares or options in a startup should be valued at rounded down to zero.
While I don’t agree with them necessarily, I’d certainly value crypto-tokens at zero. Or maybe a nickel...
Re: Ask HN: Any success stories with token-based employee incentives?
#8Most blockchain startups fizzle. The likelihood of these tokens ever becoming valuable is very small. Moreover, even if they do amount to something, you'd need to examine how your compensation is worded - are you getting "X tokens" or "$X value of tokens"? If it's the former, why does "X" mean anything? The unit value of each token may mean that X is worth pennies. If it's "$X value of tokens", when/how is X calculated?
This is the equivalent of saying, "I have a great idea for a startup. I can't pay you or code, but if we make it big, you'll be rich!"
Re: Ask HN: Any success stories with token-based employee incentives?
#9> I am skeptical of tokens especially now that the crypto-bubble has burst. If the tokens are issued and eventually listed, what are the economics of how or why the price would actually rise?
On one hand, offering tokens is a great way to avoid the cost of trading stock on an exchange. OTOH startups are so very rarely publicly traded that it's moot. Also, the world of tokens is rife with scams and P&D nonsense. It would be very exceptional to find a token that's legitimate.
> what are the economics of how or why the price would actually rise?
If the company creates value (or even the perception of value), it may indeed rise. Of course, it's critical to determine the relationship between the Real Equity and these tokens. Right now the company has some amount of ownership represented by some kind of paper-trail "tokens." How will this be altered/diluted to issue the tokens? Will the tokens completely convert/supersede the existing equity representation?
It's probably moot, really, since so many tokens are scams.
> Does anyone know of any good resources on this kind of compensation?
You should consider this part of your compensation to be null -- like lottery tickets that are one-in-a-million shots.
Re: Ask HN: Any success stories with token-based employee incentives?
#10Ethereum is a 'success story', but its not 2015 anymore. I think you'd mad to take tokens as a form of compensation. Why not get a normal job and buy some crypto if you want to gamble?