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Success Tokens: An Incentive Aligned Way for VC Funds to Invest in DAOs

UMA Success Tokens Provide a “Series B” Option for Crypto Investors

A Place for VCs in Crypto

I recently spoke with a crypto VC who stated

“There are no Series B deals in crypto.”

What he meant is that a typical crypto project will launch a token after their seed or Series A deal, leaving a later stage investor with no option for a private investment. Instead, that investor will have to negotiate an investment in publicly traded tokens with the DAO that controls a project’s treasury.

So we engineered a solution: Success Tokens.

“Success tokens” are two tokens wrapped in one: a project token with a call option on that token.

Instead of paying the VC investor a bonus upfront (in the form of a discount), the success token pays the VC investor a bonus only if good things happen. In fact, VCs will have doubled exposure as the price rallies. It’s a win-win.

An example for $SUSHI:

  • Create a “success token” that combines 1 $SUSHI and 1 $25 strike $SUSHI call option
  • Sell the success token at current $SUSHI price (not at a discount)
  • This success token expires in X years (let’s say 2 years)
  • At expiry, the token is redeemable for 1 $SUSHI + the value of the $25 strike call option (paid in $SUSHI)

Next Steps

Success tokens offer an alternative way for DAOs to diversify their treasury and sell tokens to VC investors in an incentive aligned way (no discount).



UMA is the first optimistic oracle connecting smart contracts to any data, anywhere

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Hart Lambur

Co-founder @UMAprotocol. Believer in Universal Market Access & decentralized finance. Previously founder @Openfolio, trader @GoldmanSachs, CS @Columbia.