Why Your SAFT Is Structurally Obsolete

SAFTs assume a single, dominant chain where token value accrues. Today, value is fragmented across rollups, app-chains, and alt-L1s. A token tied to a monolithic L1 is a bet against the entire Celestia, EigenDA, and Arbitrum Orbit ecosystem.

• Value Leakage: Fees and activity migrate to specialized execution layers.
• Structural Risk: Base-layer congestion or failure no longer cripples the application.
• New Model: Projects now launch as app-chains or sovereign rollups, making a single-chain SAFT irrelevant.

SAFTs finance development for a future, speculative token. Protocols like Uniswap, Aave, and GMX now generate real, on-chain revenue distributed to holders. Investors demand tokens that are cash-flowing assets, not lottery tickets.

• Demand Shift: VCs now model DCF on protocol fees, not just token supply narratives.
• Immediate Accrual: Fee switches can be flipped post-launch, creating tangible yield from day one.
• SAFT Gap: The structure has no mechanism to account for or distribute this operational revenue.

SAFTs lock capital for years based on a roadmap. Platforms like Fjord Foundry (LBPs) and Balancer pools enable immediate, price-discovery liquidity. This creates market-driven valuations at launch, exposing overfunded projects instantly.

• Immediate Price Signal: Eliminates the multi-year valuation black box.
• Capital Efficiency: Teams raise smaller, targeted rounds closer to launch.
• SAFT Obsolescence: Why lock money for 3 years when you can bootstrap liquidity in 3 days with clear metrics?

SAFTs lock in valuations years before product-market fit, forcing teams to chase unsustainable growth metrics to justify paper gains. This leads to toxic tokenomics and rushed mainnet launches.

• Result: >80% of tokens from 2017-2019 SAFTs are down >90% from initial unlock price.
• Structural Flaw: Investors are incentivized to dump at unlock, not support long-term ecosystem health.

A SAFT is a securities contract. Even if the future token is deemed a utility, the SAFT itself creates a permanent regulatory taint, inviting SEC scrutiny for every subsequent action.

• Case Study: Telegram's $1.7B TON raise was killed by the SEC pre-launch.
• Modern Reality: Protocols like Helium and Filecoin spent years and millions litigating and restructuring their SAFT-born tokens.

SAFTs allocate tokens to whales and VCs pre-launch, starving the protocol of its most valuable asset: a dedicated, aligned community. Modern success is built on fair launches and airdrops.

• Contrast: Uniswap's community airdrop created >500k loyal delegates and a $7B+ treasury.
• SAFT Outcome: Concentrated supply leads to governance apathy and eventual protocol stagnation.

SAFT unlocks create predictable, massive sell pressure that no DEX liquidity pool can absorb. This triggers a death spiral where declining price destroys staking APY and validator security.

• Mechanism: >30% of circulating supply often unlocks on day one, crashing price by 40-60%.
• Modern Solution: Vesting-as-a-Service (e.g., CoinList, Tokemak) and linear streaming unlocks are now table stakes.

SAFT terms are immutable law. When a protocol needs to pivot its tokenomics (e.g., shifting from inflation to fee capture), SAFT holders can veto changes, paralyzing development. Ethereum avoided this by having no pre-mine.

• Consequence: Teams are stuck with obsolete emission schedules and misaligned staking models for years.
• New Model: Continuous fundraising via Liquidity Bootstrapping Pools (LBPs) and community rounds allow for agile iteration.

SAFT capital comes with board seats, reporting requirements, and traditional corporate governance that is antithetical to decentralized protocol development. It taxes founder attention and slows iteration speed to a crawl.

• Resource Drain: Founders spend >30% of time on investor management vs. building.
• Post-SAFTA Model: DAO-led grants, protocol-owned liquidity, and retroactive funding (like Optimism's RPGF) align capital with execution, not paperwork.

A SAFT provides a one-time capital infusion, but modern chains like Solana, Avalanche, and Sui require continuous, protocol-directed funding for core development, grants, and ecosystem incentives. This creates a funding cliff post-launch.

• Misaligned Incentives: Team's runway ends while network needs are just beginning.
• Ecosystem Lag: Inability to fund public goods or developer grants competitively vs. chains with sustainable treasuries.
• Valuation Trap: High SAFT FDV pressures teams to prioritize token price over long-term network security and utility.

Replace the one-off SAFT with a model where the protocol itself owns and deploys capital sustainably. This is the Ethereum Foundation and Optimism Collective model, powered by Lido, Aave, and other fee-generating primaries.

• Sustainable Treasury: Protocol fees and MEV are captured and recycled into grants, security, and R&D.
• Aligned Incentives: Funding is tied to network usage and success, not a speculative token unlock schedule.
• Builder Magnet: A well-funded grants program attracts top talent, as seen with Polygon and Arbitrum.

The infrastructure for dynamic, transparent funding now exists. Tools like Syndicate for DAO formation, Llama for treasury management, and Questbook for grant distribution make the SAFT's opaque, manual process archaic.

• Transparent Governance: Capital allocation is visible and governed by token holders or delegates.
• Modular Spending: Funds can be earmarked for specific verticals (e.g., infra, dev tooling, dApps).
• Composability: Treasury assets can be deployed in DeFi (e.g., MakerDAO's PSM) to generate yield for the protocol.

For VCs, a pure token warrant is a binary bet on adoption timing. The superior structure is equity in the core dev entity + attached token warrants, mirroring Celestia's early rounds. This provides downside protection and aligns with the long-term build.

• Dual Alignment: Equity rewards core tech development; warrants capture network upside.
• Long-Term Horizon: Removes pressure for premature token launch to provide investor liquidity.
• Regulatory Clarity: Separates security (equity) from potentially non-security (functional network token).