In 1919, the Michigan Supreme Court ruled against Henry Ford in Dodge v. Ford Motor Co. and "held that Henry Ford had to operate the Ford Motor Company in the interests of its shareholders, rather than in a manner for the benefit of his employees or customers." Because companies are in the business of making a profit, they cannot turn it into a charity (timely, Mr. Altman). Nevertheless, shareholder primacy continues to be upheld, as many CEOs and leaders' success is based almost purely on the answer to the question, "Did stock go up?"

For the most part, our current system views all shareholders equally. Sure, some folks get a quicker response to an email, but with regards to profits and dividends, this has held true. And it has some merit, but part of my conviction in blockchains comes from how a core feature of blockchains and smart contracts can improve upon this model. Part of my job is to help design the new standards for what this model should look like. How can a digital asset best align the various shareholders?

The nuance there is natural in crypto. Of course, your shareholders are your users, your team, your investors, and a myriad of other players in the space. Most projects "go public" around what would be most companies' Series B or so. For this essay, I want to examine where we currently are and where I think these asset issuance standards may be going.

Let's take a step back and get into the mind of a crypto founder. For this, I will be speaking in the first person... starting now: I have built a project and raised some money, and now I'm ready to go public. I can go public when I want to because that's how this space works. We're all a bunch of Netscapes going public at the break of dawn because the market can decide our value, and going through the pain of another raise seems honestly worse than just getting my asset out there. Crypto emphasizes ownership and decentralization, so I wouldn't dream of having more than 50% of my asset's supply held by my team and investors (i.e., insiders). All the users of my product and the community that I have built up to this point seem entitled to some of my asset. Internal thoughtsteam: Why?... Because I wouldn't have gotten to this stage and valuation without them? I see how rewarding them can make users even more loyal to my product and amplifiers of my vision... Alright, fair enough, but at least I now have some liquidity after all these years I have put into my project, right?... Not quite. The community will likely expect me to have a 12-month cliff before any of your assets unlock, just to be sure you're really in it for the long run. Okay, well, I guess that's fair, and I believe in my team and project, but if the only holders of my liquid token are a bunch of retail users, how can I trust them not to sell my asset to $0, and I never reap the fruits of my labor?... and scene.

Well, I'm glad you asked, dear founder. But before I get to the answer, I need to discuss what makes this industry interesting. Most people know crypto because of Bitcoin and other so-called "cryptocurrencies" that suffer from immense volatility due to an industry fraught with scams and gambling. There's hope that this all leads to something much more, but from the creation of Bitcoin and then Ethereum, there are two fundamental innovations that make the formation and coordination of capital in crypto so enticing.

The first is blockchains themselves. A lot of people discuss them as an internet-native ledger, yet the true superpower stems from establishing a permissionless database for strict global consensus. This translates to anyone in the world being able to read and contribute to a live database that is cryptographically secured and agreed upon as a source of truth by participants around the world. This credible neutrality fosters cooperation and trust, even among parties that may be considered adversarial, say a US person and their ex-partner, located in China.

The next level of superpowers came with Ethereum and smart contracts. Smart contracts make this trust from credible neutrality programmable. This means that complex agreements—from simple transactions to elaborate financial instruments and decentralized autonomous organizations (DAOs)—can run autonomously, transparently, and efficiently.

So, bringing this all together, we have a database that no single entity controls, everyone agrees is a source of truth, and anyone can contribute to it. Are you not entertained!?

Of course not. That's a bunch of hoopla. But when you start building things, you realize that this creates a brand new means of capital formation, enabling new innovative funding methods and incentivization mechanisms for projects and users.

Getting back to the point. As our founder, having raised enough capital from VCs and angels and found significant product-market fit, I'm looking for the next step. An IPO would be many years out. It's inhibitingly expensive, and we've seen funds raised from going public trending down year after year. Alternatively, I may look at launching a digital asset. Not only do I get earlier liquidity and capital, but there are major sustainability and growth prospects. I can reward early believers in my projects with ownership, or "skin in the game," and they can reaffirm their alignment.

I've issued a digital asset, and I have my shareholders. Now, let's look back to 1919 and adapt it for the 21st century. Smart contracts enable me to have programmability with my asset. We are just starting to scratch the surface for what's possible with programmable assets and the relationship between shareholders and a business. One simple example that I use for my mental model is the concept of staking. This is widely adopted in crypto markets today, and while staking has different contexts and purposes in different scenarios, we can dumb it down to the ability to lock an asset for a benefit in return. As a shareholder, if I am not looking to flip a token for a quick profit, I may stake my position, which can entitle me to benefits such as the right to govern, determine the future flow of capital and revenue, or the ability to increase my stake in this asset that I believe in.

This simple model of staking allows any shareholder to convey a long-term belief in the company and its equity. It sounds basic, but this is a radical concept in the legacy system, and I believe it will form the foundation of a contemporary shareholder, empowered by programmable finance.

We have a long way to go, but I'm confident this industry will usher in the Internet Financial System and upgrade global coordination.