What Are Dividends? From Tokenized Equity to Yield-Bearing Instruments: A Paradigm Shift

In traditional financial markets, “dividends” refer to the practice of publicly listed companies distributing profits to shareholders in the form of cash or stock, which is a core way for shareholders to obtain investment returns. However, in Web3 In the cryptocurrency space, the connotation of “dividends” is being redefined—it goes beyond simple profit distribution, integrating token economics, governance power struggles, and on-chain yield reconstruction. In traditional dividend distribution, shareholders share company profits based on their shareholding ratio. However, the Web3 world breaks this unidirectional model; while token holders contribute funds and liquidity, they are often excluded from the actual profit distribution, creating a unique phenomenon of “unequal rights for coin holders.”

The Collision of Traditional Dividends and the Crypto World: The Struggle for Coin Equity

In the Web2 business model, companies raise funds by offering equity to VCs, who exit through an IPO to gain returns, while retail investors rarely participate in early dividend distribution. The breakthrough of Web3 lies in the fact that the issuance of tokens is essentially the process of equity listing, which includes retail investors in the early financing system. However, problems also arise: equity investors enjoy profit dividends from company operations and can cash out through tokens; meanwhile, token holders face the dilemma of ‘paying without rights’.

• Structural exploitation of VC coins: Most projects retain a company entity in Web2 and undergo multiple rounds of equity financing, with project profits primarily flowing to equity investors (LP) through company dividends, while token holders can only rely on secondary market fluctuations to profit.
• Governance rights are nominally assigned: the “Token Holder Decision Committee” is essentially a facade, and the project’s direction is still controlled by a few individuals, reducing token governance to mere formality.

Projects like STONKS are trying to break this deadlock: all participants can fairly acquire chips, without preferential treatment for preferred stocks, by electing a decision-making committee through the community, exploring a true path of equal rights for stock and coin.

The Dual Attributes of Tokens: The Art of Balancing Assets and Liabilities

Tokens play a complex role in Web3 business models: they are both equity assets and imply debt attributes.

• Asset attributes: As a project “equity,” the token grants holders governance rights and expected returns, such as liquidity mining, transaction fee sharing, etc.
• Debt Attribute: When the issuance price of the coin is higher than the actual value of the project, the premium portion becomes system debt. If the business cash flow cannot cover this premium, the coin will face devaluation pressure.

Eliminating debt requires relying on two major strategies:

1. Time for space: Improve real returns through long-term operations and gradually digest the bubble.
2. Parent coin produces child coins: Issue new assets to transfer debt (such as Gala Node Sale)

Web3 Dividend New Model: On-Chain Revenue Distribution Innovative Practice

Real Yield Protocol

Some DeFi projects directly distribute protocol income (such as swap fees, lending interest) to token stakers, for example:

• Pendle Finance tokenizes the yield rights into YT (Yield Token) and PT (Principal Token), allowing YT holders to capture future cash flows.
• Render The network charges users of GPU rendering services and allocates profits to token holders.

Consumption is Revenue Model

FEC (Fortune Earnings Coupon) proposes the concept of “spending is earning”: when users spend, the system destroys part of the FEC and mints ADN airdrop nodes, which return 10,000 FEC (10 times the investment) over 100 cycles. The return mechanism uses a compound interest weight design, resulting in exponential growth of later returns, incentivizing long-term holding.

Governance Rights Monetization

DAO organizations decide on the use of treasury funds through proposal voting, and some projects airdrop profits to governance token holders in the form of stablecoins, achieving transparency in on-chain dividends.

Public Companies Entering: A New Form of Dividends Merging Coins and Stocks

Traditional listed companies are trying to incorporate crypto assets into their balance sheets, creating a new play of “coin-stock linkage”:

• MicroStrategy has allocated Bitcoin as a reserve asset since 2020, with a maximum stock price increase of 4315.85%, allowing shareholders to indirectly benefit from BTC appreciation.
• Diversification trend: In addition to BTC/ETH, companies are starting to increase their holdings of emerging assets such as SOL and TRX. For example, SRM Entertainment announced that it would use TRX as a core reserve and received support from Sun Yuchen.

Compliance and Taxation: The Key Framework for Dividend Implementation

Web3 companies enhance dividend distribution efficiency by optimizing global structures:

• Hong Kong: Annual profit ≤ 2 million HKD tax rate 8.25%, offshore dividends tax-exempt
• Singapore: Corporate income tax 17%, but offers RHQ (Regional Headquarters) tax incentives
• BVI: Zero corporate income tax, strong privacy, suitable for holding structures

Structured products (such as the SAFT agreement) become compliant vehicles: investors initially receive interest on stablecoins, and later can convert to project tokens at a discount, balancing fixed income and speculative space.

The dividend distribution of future Web3 will surpass the old logic of “shareholders exclusively profiting” and evolve towards “contributors sharing value.” The ADN nodes of FEC will convert consumption behavior into rights to earnings, Pendle’s YT tokens will slice and redistribute revenue streams, and DAO treasury governance will make coin holders decision-makers in dividend distribution. When on-chain contracts can automatically execute creator royalties (such as NFT resale shares), and when the BTC on the balance sheet of publicly traded companies becomes shared assets for shareholders, the definition of dividends has been reborn in the crucible of Web3—it is no longer a check, but a programmable network of rights to earnings.