Welcome to Crypto Long & Short, your institutional newsletter. This week, we explore the importance of investor relations in token markets. Poor investor relations can lead to the downfall of even the most promising projects, as seen in the case of Ranger Finance.
Institutional-grade investor relations is the missing piece in token markets, and protocols are now seeking public market investors to provide more durable capital. A key part of investor relations is regular investor calls where management provides forward guidance.
Research has shown that firms that consistently meet or beat their own guidance enjoy a measurable stock price premium. In crypto, protocols like Maple Finance and EtherFi are leading the way in providing guidance and delivering on their promises. However, guidance without delivery is just marketing, and investor relations in crypto doesn't end with a dashboard.
Guidance and accountability are at the heart of credibility for protocol teams, and it is credibility that builds conviction in public investors. Meanwhile, institutional capital is moving through crypto markets in a new way, with major trading firms separating custody from execution. This shift signals a broader evolution in digital asset market structure, making it more efficient and less risky for institutions.
The infrastructure is catching up, with firms like Wintermute and Nomura's digital asset arm Laser Digital using collateral held in regulated bank custody while maintaining full access to exchange liquidity. As the market continues to mature, we can expect to see more institutional participation and a reduction in counterparty risk.