Users Are the Best Investors — Until Someone Needs to Be Liable

An anonymous essay landed in my feed yesterday. Actually, it landed in every feed. The title is 'Users are the best investors to have.' The essay is short, confident, and completely devoid of data. It asks token holders to surrender the one thing equity holders spent a century acquiring: enforceable rights. It frames that surrender as sophistication. It is not sophistication. It is a liability transfer. Within hours, a deeper structural analysis of the essay started making the rounds. The report's first rating is a brutal one: information completeness — extremely low. The essay produced exactly two claims, no project, no protocol, no code, no team, no market data. The report then spends ten sections deconstructing those two claims. This is the part nobody reads and everybody needs. Because under the surface of a feel-good governance slogan, there is a legal, economic, and structural trap that the market has not priced yet. Let's reconstruct the source material before we attack it. The original essay argues that token holders do not need the rights shareholders take for granted. It says users are better investors than financial speculators. On its face, this is a critique of the 2020-2021 DeFi governance craze. During that period, every protocol forked a DAO, printed a governance token, and let whales vote themselves richer. Uniswap, Compound, and a thousand smaller DAOs became expensive experiments in direct democracy. Voter turnout was low. The richest wallets controlled proposals. The 'shareholder' model felt stale. So a new narrative arrives: stop thinking of token holders as shareholders. Think of them as users. Users love the product. Users don't file lawsuits. Users are the best investors. That storytelling works until someone asks for a refund. And that is exactly what the analysis report forces us to do. Let's isolate the report's core finding. The essay's entire intellectual weight rests on two statements. One: token holders don't need shareholder rights. Two: users are the best investors. The report correctly labels both as opinion, not analysis. There is no case study. No successful protocol built on this exact philosophy. No historical comparison. No token model. The only thing we can do is reverse-engineer the thesis into a testable token design. The report calls this the 'utility token vs equity token' question. If you strip shareholder rights from a token, you are left with a utility token. That token is supposed to be consumed, not owned. It grants network access, discounts, priority, or vote-free participation. In a pure form, that is a legitimate design. The problem is that almost nobody launches a pure utility token anymore. They launch a token, list it on exchanges, and call it an ecosystem asset. That is not a utility. That is equity with extra steps. From a technical perspective, the report has nothing to analyze because the essay has no technical content. No smart contract, no mechanism, no repo. This is a red flag, not an absence. I have been on the other side of this pattern. During the ICO sprint of 2017, I built scripts to catch the gap between announcements and wallet flows. Faster than the market, but never faster than the legal reality. The teams that promised the least were the teams that delivered the least. The teams that talked about 'community, not equity' were the ones stuffing their own wallets. The same pattern is showing up in 2026. When a governance essay arrives without a mechanism, it is not a philosophy. It is a PowerPoint. Speed is the only currency that doesn't settle, but even settlement needs a legal address. Let's be precise. A utility token can be engineered. It needs a gated resource. Think API credits on a decentralized compute network, or in-game currency that buys land. The report notes that this design is theoretically aligned with GameFi and DePIN. In those sectors, 'use' is real. A token that unlocks bandwidth or buys virtual goods is a product. The holder is a customer. But the moment that same token trades on an open market with a price chart, the customer relationship is polluted by speculative intent. The buyer is not buying access to compute; they are buying a cheaper ticket than the next guy. That is not use. That is a trade. The report's token economics section is mostly N/A, for the same reason I keep hitting: no data. No supply. No emissions. No treasury. No revenue. The essay does not even pretend to have a model. That is rare even by crypto standards. But the logical conclusion is clear. If a token carries no shareholder-style rights, its value must come from use. In the report's language, it needs a consumption scenario or a cash flow loop. Without that, pure utility tokens are anchored to fake demand. The report calls it pseudo-need, and I could not agree more. I have audited enough token models to know that a token without a user mechanism is a lottery ticket with extra steps. The difference between a lottery ticket and a utility token is not the tech. It is whether the token actually grants a right to something. The essay offers a name without a right. Here is where the information gain gets sharp. The report says the biggest risk is a 'rights vacuum.' Let that phrase sit. In a rights vacuum, the token holder is neither a shareholder nor a user. They are a donor with a market cap. They are not protected by securities law, because they have no investment contract. They are not protected by consumer law, because they have no product. They are in a legal category that the essay would love to call 'community.' Laws do not recognize 'community' as a protected class. Courts recognize investors and consumers. When you are neither, you are nothing. Volatility is the tax you pay for access to nothing. The most important section of the report is regulatory. The essay's central move is to rename token holders as users, hoping that the SEC will not see an investment contract. The report responds with a well-known answer: Howey does not care about labels. Under the Howey test, a security exists when money is invested in a common enterprise, with an expectation of profit, from the efforts of others. A public token sale hits all four prongs. Calling the buyer a 'user' does not change the economic reality. The report invokes SEC v Telegram, and this is the right precedent. Telegram sold Grams to investors, calling them commodities for a new digital ecosystem. The court did not accept the label. It looked at the expectation that Gram would rise as Telegram built the TON network. Because that expectation existed, the sale was an investment contract. The exact same logic applies to any marketable token. We don't have to like the law. The SEC has a long memory and a long arm. In a bull market, no regulator is in a hurry. In a bear market, they remember every fundraising round from three years ago. If a project says 'this token is only for users' while marketing it to anonymous buyers, the SEC will not say 'users are exempt.' They will ask why the project accepted money from people who never used the product. They will ask why the token was listed on an exchange. They will look at the whitepaper and find the word 'ecosystem' more times than 'risk.' That is not a defense. That is a flag. Let's make this more uncomfortable. If a project truly removes all shareholder-like rights, the project can become a centralized fund with no fiduciary duties. The report calls this 'unregistered securities offering plus unconstrained fund manager.' That is not a retreat from securities law. That is a dive into the deep end. Traditional securities law exists because people with money need protections from people with power. Strip away voting, dividends, and liquidation rights, and you have a project where the management team controls everything and owes nothing. That is the worst governance outcome, not the best. The idea that users should replace shareholders sounds like democracy. In practice, it is an emperor who says the people are his family. The report grades the essay's investment value at one star. In a bear market, this is exactly the type of narrative that deserves a one-star rating. The market is not in a mood for philosophical excuses. It is in a mood for audits, revenue, and collateral. The current tone of the market is survival. Readers want to know which protocols are bleeding and which tokens are safe. The last thing they need is an anonymous essay explaining why the rights attached to their token are a hindrance. If a project adopts this thesis, the first thing I check is its treasury. The second thing I check is its exchange listings. The third is its community. In a bear market, the absence of rights is not a feature. It is a liquidation event waiting to be discovered. From my experience covering the FTX collapse, what matters is not the brand story. FTX had a brilliant brand story. Alameda had complex models. The entire house of cards collapsed when someone checked the transfer ledger against the public story. In the same way, an essay that tells users they do not need rights is a public transfer ledger in reverse. It says: there will be no accountability, and we want you to celebrate it. I have seen this exact mental model in failed protocols. The first sign is a governance memo. The second sign is a token unlock. The third sign is an empty treasury. That's the market. It often takes longer than you think, but it always prices in the truth. The contrarian angle is not that the essay is wrong. It is that the essay is dangerous precisely because it is so user-friendly. A team that says 'we don't treat you as investors' is doing two strategic things. First, it is preemptively lowering your expectation of accountability. It is making you feel sophisticated for accepting less than the law would give you. Second, it is creating an insider's market. The quiet, unstated reality of a no-rights token model is that the first 100 users — the team, their friends, the VCs — already know the true purpose of the token. The public does not. The public is told to trust the product. The insiders know the product is the token sale. In that game, users are not the best investors. They are the best counterparties. Arbitrage isn't a strategy; it's a consequence of mispriced labels. The label here is 'user,' and the arbitrage is in favor of the people who know better. That's the blind spot in the report, too. The report says the essay's risk is medium. I would push the risk higher. Not because the essay itself has substance, but because it normalizes a pattern. It takes a complex set of governance obligations and compresses it into a slogan. Slogans are cheap to repeat. Once a community accepts 'users are the best investors,' the next step is 'we don't need to report to users.' Then it becomes 'we don't need to return funds to users.' Each step is completely logical and each step is a slow-motion exit scam. I am not saying the anonymous author is an exit scammer. I am saying the essay is a decoy. It makes the absence of rights feel like a revolution. The market should be asking for rights, not telling itself they are unnecessary. The other contrarian point is about time. The report predicts this narrative will last less than three months unless a real project adopts it. I think the narrative will last longer. It will embed itself into the next wave of consumer tokens. DePIN, social, and gaming projects will adopt the 'user, not investor' language because it helps them sell tokens to non-crypto people. The problem is that non-crypto people do not read Howey tests. They read 'users are the best investors' and buy more tokens. When the token drops 80%, they will not call themselves users. They will call the exchange, the team, and the regulator. The narrative will eventually create a consumer-protection backlash. That is the real risk. The market is not ready for a token holder to say 'I am a user, and I want my money back.' The next watch is specific. Look for any token sale in the next 90 days that references 'users are the best investors' or its siblings. Open the tokenomics section. If there is no product mechanism, no cash flow loop, no governance right, and no liquidation preference, then walk. Users are the best investors to have — but only when they own something. If they own nothing, they are just liquidity. Speed is the only currency that doesn't settle, but in the end, the market always does. And the market has a way of asking: what did you actually own?