Welcome to Crypto Long & Short, our institutional newsletter. This week, we examine the crucial role of investor relations in token performance. Poor investor relations can lead to significant losses, as seen in the case of Ranger Finance, whose tokenholders forced the liquidation of the protocol's treasury just two months after a successful ICO. Institutional-grade investor relations are still missing from token markets, and protocols seeking public market investors must provide regular guidance to management.
Research has shown that firms that consistently meet or beat their own guidance enjoy a measurable stock price premium. In crypto, Maple Finance and EtherFi are leading examples of protocols that provide regular investor calls and guidance, resulting in increased token valuations. However, guidance without delivery is merely marketing, and investor relations in crypto require accountability and credibility. We also discuss how institutions are separating custody from execution in crypto, signaling a significant shift in market structure.
This change allows for more efficient use of capital, reducing costs and increasing returns. As the infrastructure catches up, crypto is beginning to follow a familiar pattern, with traditional finance solved problems being applied to the digital asset space. According to a recent survey, 73% of institutional investors plan to increase their digital asset allocations this year, with respondents becoming more selective about counterparty risk.