A token has a reason to exist when holding it gives a claim that anyone can verify on-chain: a share of fees, supply burned from usage, or a right that users must hold the token to exercise. In our view, governance alone is rarely enough. Even Uniswap, with more than $1.05 billion in fees generated in 2025 by the time of the vote, only passed its fee switch in late 2025, with 99.9% of votes in favour.
Who decides this
The foundation council owns the value accrual decision. It is accountable for what the token promises holders, for the trade-off between paying holders and paying users or liquidity providers, and for the legal position that follows. The product team proposes parameters. Counsel reviews the structure. The council decides, because every option moves money from one group of stakeholders to another.
The decision is also hard to reverse. Once holders are paid from fees, cutting the payment reads as a crisis, even when the reason is sound. A council should only switch on a mechanism it is prepared to run through a bad year. That is why we would set the funding rule, the review date and the conditions for changing it in the same proposal that turns it on.
Which token value accrual mechanism fits the protocol?
Pick the mechanism that matches what the protocol actually earns and who it needs to keep. A protocol with steady fees can share them. A protocol that needs a large validator set should reward staking. A protocol with neither should be honest that its token is for governance and coordination, and price expectations accordingly.
Four mechanisms recur in live designs. The table compares them on what the holder receives and what it costs the protocol.
| Mechanism | Live example | What the holder gets | Funded by | Main trade-off |
|---|---|---|---|---|
| Fee switch with buy-and-burn | Uniswap’s fee switch, approved late 2025 | A smaller supply as usage grows | A share of trading fees previously paid to liquidity providers | Liquidity providers earn less and may move |
| Fee share to lockers | Curve’s vote-escrowed CRV (veCRV) | 50% of pool trading fees, paid in crvUSD | Trading fees and lending interest | Holders lock for up to four years; voting can be bought |
| Buyback and burn from most fees | Hyperliquid’s Assistance Fund | Burned supply and a standing buyer | About 99% of trading fees, per CoinShares (June 2026) | Accrual rises and falls with trading volume |
| Staking rewards | Ethereum validators | Issuance plus priority fees and MEV | New issuance and user transaction fees | Part of the yield is dilution, not revenue |
The rows are not exclusive, and a protocol can combine two. The point is to know which row carries the token’s case, because that row is what holders will test.
Should the council turn on a fee switch?
Turn on a fee switch when the protocol’s position is strong enough that the fee can be taken without losing the users or liquidity that generate it. A fee switch does not create revenue. It moves revenue from one party to another; in Uniswap’s case, from liquidity providers to token holders.
Uniswap shows both the scale and the delay. Under the proposal Uniswap Labs and the Uniswap Foundation introduced in November 2025, a portion of trading fees previously paid entirely to liquidity providers now goes to the protocol. The protocol then uses it to buy and burn UNI. A one-off burn of 100 million UNI was set to approximate what would have been burned had the switch existed from launch. The proposal itself pointed to a changed regulatory climate as part of the case.
Our view: model the switch against the protocol’s nearest competitor before voting. If moving 10–20% of the fee to holders would push meaningful liquidity elsewhere, the switch costs more than it returns. Those percentages are our illustrative test range, not market data. The council should also take legal advice first. Any structure that pays holders from protocol revenue raises questions that counsel must answer for each jurisdiction where the token trades.
Where does the staking yield come from?
Every staking yield has a source, and the council should publish it. There are only two kinds: new issuance, which dilutes holders who do not stake, and revenue from users. A yield that is mostly issuance is a transfer from non-stakers to stakers, not value created.
Ethereum is the clearest reference. CoinShares describes validator rewards as two streams: consensus rewards from issuance, and execution rewards from user priority fees and MEV. The second stream rises and falls with demand for blockspace. A council designing staking for its own token should split the expected yield the same way and disclose both parts. Publish the split as a range, not a single figure, since the revenue part will move with usage.
The test we apply is simple. Take the published staking yield and remove the part paid from new issuance. What remains is the real yield, and it is the number that tells a holder whether staking earns them anything beyond protection from dilution. If the real yield is close to zero, the staking programme is a supply lock, and the council should describe it that way.
The legal picture for staking has moved twice in the United States. On May 29, 2025, the SEC’s Division of Corporation Finance issued a staff statement on protocol staking. It took the view that certain staking on proof-of-stake networks does not involve a securities offering. It left out liquid staking, restaking, and assets with features such as rights to future income. On March 17, 2026, the Commission itself issued an interpretive release (Release 33-11412). As summarised by Morrison Foerster, it says staking generally does not involve securities transactions where rewards are tied to network participation, and it addresses delegated, custodial and liquid staking, with conclusions limited to the structures it describes.
The practical consequence is design discipline. Staking that secures a network and pays protocol-determined rewards sits in one position. A staking product that pays out a share of revenue looks more like a claim on income, and counsel should review it as one.
How should the claim be distributed?
Decide who should end up holding the claim before choosing the mechanism, because the mechanism decides it for you. Fee shares flow to whoever locks or stakes. If the token sits mostly with exchanges, early funds and a few large wallets, they collect the accrual.
Vote-escrow designs show the trade-off clearly. Under Curve’s veCRV model, locking for four years gives one veCRV per CRV, and one year gives 0.25, with balances decaying as the unlock date nears. Holders vote every week on which pools receive CRV emissions. Curve’s documentation notes that outside marketplaces pay voters to back specific pools. Long locks reward committed holders, and they also create a market for directing emissions that the council does not control.
Our recommendation is to model holder distribution under each mechanism for the first 24 months. If the result is that most of the value goes to a few wallets, change the design or change the distribution plan. Our guide to token design as one system covers how allocation and utility interact.
How will the council know it is working?
Measure net supply and holder breadth, not price. Price reflects too much else. A Messari report in March 2025 argued, as later reported by DL News, that there was no clear evidence markets reward buyback programs. That is a reason to measure the mechanism directly.
Two numbers do most of the work. The first is a coverage ratio: value removed from circulation by burns, buybacks and locks, divided by value added by unlocks and emissions. CryptoSlate’s January 2026 analysis frames this as the test for buybacks, and it works for any accrual mechanism. The second is the number and spread of addresses receiving the accrual. If both move in the right direction for four quarters, the mechanism is working. Our guide to token buyback programs covers sizing and funding in detail.
What goes wrong: distribution left to chance
The council spends a year on the mechanism and an afternoon on who will hold the token. The fee switch goes live. Revenue flows to stakers as designed.
Then the council looks at who the stakers are. A few early funds, two exchanges and a market maker hold most of the staked supply. Retail holders and the users who generate the fees hold almost none. The mechanism works exactly as written, and it pays the wrong people. Users see value flowing to insiders, and the token’s story weakens just as the council wanted to strengthen it.
The defence is to treat distribution as a plan with targets, not an outcome. Decide which groups should hold the token. Set a target for holder count and concentration. Design airdrops, incentives and listings to reach it, and check the result each quarter.
How Alcyone approaches it
Alcyone designs value accrual and distribution together, as one plan with an owner for every part. In Alcyone’s fundraising and tokenomics advisory, the work starts with a fixed-scope, fixed-fee assessment; for value accrual, that means what the protocol earns and who holds the token today. Alcyone reports that one Layer-1 client’s first token launch on its chain reached more than 5,000 new holders. After launch, the same partners report quarterly. Clients are under no obligation to use TrustSwap products.