The Secret to Token Success: Effective Investor Relations

Welcome to Crypto Long & Short, our institutional newsletter. This week, we examine the crucial role of investor relations in token performance. In the world of crypto, a 14x oversubscribed ICO can quickly unravel due to poor investor relations, as seen in the case of Ranger Finance. Institutional-grade investor relations is the missing piece in token markets, and it's essential for protocols seeking public market investors. A key aspect of investor relations is regular investor calls, where management provides forward guidance, as seen in Maple Finance and EtherFi. Research has shown that the value of forward guidance lies not only in providing it but also in its accuracy. Firms that consistently meet or beat their guidance enjoy a measurable stock price premium. In crypto, Maple and EtherFi are leading examples of this dynamic, with Maple delivering on its guidance and EtherFi providing specific projections. However, guidance without delivery is mere marketing. Investor relations in crypto requires more than just a dashboard; it demands guidance and accountability. Meanwhile, institutions are separating custody from execution in crypto, with major trading firms holding assets in regulated bank custody while executing trades on exchanges. This shift signals a broader evolution in digital asset market structure, making it more efficient and lower-risk for institutions. As the infrastructure catches up, collateral can be held in regulated custody, earning yield and reducing the effective cost of maintaining trading positions. This maturing market structure is expected to increase institutional participation, with 73% of institutional investors planning to increase their digital asset allocations this year.