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1. Why Does a Governance Token Need to Return Value?
ScopeLift founder and chief executive Ben DiFrancesco argues that the legal worry long used to justify governance tokens that pay holders nothing is losing its force. In an interview recorded on October 7 and released on October 12, he said protocols able to earn fees should now have a credible plan for sending value to their tokens, which he sees as instruments of economic security.
The argument rests on a simple chain of reasoning. A governance token gives its holders a say over a protocol's treasury, parameters and upgrades. If the token itself is worth little, the people steering the system have little at stake, and an attacker needs to spend little to acquire influence. DiFrancesco described the token's market price as a key component of why the system works at all.
That framing differs from the way many teams have talked about their tokens. For years, governance tokens were presented as pure voting rights, with no claim on revenue. The reasoning behind that design was cautious: in the United States, promising holders a share of profits can make an asset look like an investment contract, which brings securities-law obligations.
2. How Did Regulatory Fear Shape Token Design?
Fear of enforcement produced a generation of tokens that carried no dividends and no buybacks. DiFrancesco said that promising either one would have put a project at serious risk of violating securities law, so teams kept value-returning features out of their designs, even when their protocols generated meaningful income.
A buyback uses protocol revenue to purchase the token on the open market, which supports demand for it. A dividend-style distribution pays holders directly. Both mechanisms tie the token's worth to the protocol's performance, and both were long regarded as the kinds of features that regulators could point to as evidence of an expectation of profit.
His point was that the situation has changed. In his telling, the legal reasoning that once justified leaving tokens disconnected from protocol income is no longer a strong excuse. He said he does not accept that explanation anymore from teams that dismiss the token's role, and he expects the shift to bring what he called increased scrutiny for projects that could return value but choose not to.
3. What Should a Credible Plan Look Like?
DiFrancesco did not call for every protocol to pay out revenue. His standard is narrower: a large protocol that earns money, or could, and that has or plans a token should be able to tell a story about how value reaches that token, and the story should be rooted in something real rather than in vague promises.
His example was a protocol that charges a fee and then either distributes it or uses it to buy back the token in a programmatic way. A programmatic mechanism runs by rule rather than by discretion, so holders do not depend on a team's decision each quarter. He named Uniswap as a large project that already works this way.
Uniswap's governance approved a proposal in December 2025 that switched on protocol fees and arranged for UNI tokens to be burned. A one-time burn of 100 million UNI from the treasury was carried out around December 28, 2025, and the fee mechanism takes a share of trading fees on an ongoing basis, with searchers claiming the fees by burning UNI. That structure ties the token's supply to the exchange's activity.
4. What Is the Economic Security Argument?
Economic security is the idea that a decentralized system is safe only if attacking it costs more than the attacker could gain. For a protocol that holds user assets and is governed by token votes, the governance token is part of that defense, because gaining enough tokens to push through a malicious proposal should be prohibitively expensive.
DiFrancesco described the risk in these terms. If the token's value falls below what it would be worth to steal the assets the protocol protects, the incentive structure breaks down. Someone could buy a controlling stake cheaply and then use it to drain the treasury or the funds under management. A token with a real claim on protocol income tends to hold more value, which raises the cost of that kind of attack.
This is why he treats value return as more than an investor-relations matter. In his view, the token's price is something the protocol's security depends on, and a team that ignores it is leaving a structural weakness in place.
5. How Does the SEC's Recent Staff Guidance Fit In?
The conversation took place against a shifting regulatory backdrop. On September 25, staff at the U.S. Securities and Exchange Commission published a set of answers to common questions saying that the announcement of a token buyback would not, on its own, amount to a promise of essential managerial efforts, provided the crypto system is functional.
A revision on September 28 added a further condition: the system must also have no central party running it. Those two conditions matter because the legal test for an investment contract turns on whether buyers rely on the efforts of others for their profits. Staff guidance of this kind is not law and can be changed, but it shows how the agency's staff now think about the question.
DiFrancesco's remarks follow that line. If a buyback by itself does not create securities-law exposure for a sufficiently decentralized and functional system, the argument that teams must leave their tokens valueless looks much weaker than it did a few years ago.
6. How Did the Safe Dispute Come Up?
The comments arose during a discussion about Safe, the multi-signature wallet used widely to hold funds for protocols and organizations. Greenfield Capital, an investor in Safe, published an open letter on October 4 saying it had asked Switzerland's federal supervisor of foundations to examine how the Safe Ecosystem Foundation is governed.
Greenfield wants independent members on the foundation's board and a strategy review led by that board. By the investor's own count, assets held in Safe accounts were about $30 billion in August 2026, down from roughly $66 billion in January 2024. The letter presents that decline as part of the case for changes in governance.
A spokesperson for the foundation said it had received no formal inquiry from the Swiss regulator and declined to discuss the specifics of the complaint. The claims in the letter remain the investor's own and have not been confirmed by the supervisor.
DiFrancesco was complimentary about the Gnosis team, where Safe began. He used the episode to make a broader point: the fact that teams are now being asked to explain how their tokens return value is, in his words, a maturation of the ecosystem.
7. Who Is ScopeLift and Why Does It Matter?
ScopeLift builds governance tooling for decentralized autonomous organizations, or DAOs, the member-run groups that make decisions through token votes. The company took over the Tally governance platform in March and renamed it Cactus in June, which places it among the firms that DAOs rely on to run proposals and votes.
That position gives DiFrancesco a view into how many protocols handle governance in practice, and it explains why his comments carry weight with the teams that use the software. Governance tooling firms see the proposals that pass, the ones that stall and the way token holders behave when real money is at stake.
His message to those teams is that the token question can no longer be set aside by pointing to legal risk alone. Projects that earn fees will face pressure from holders, and from peers, to show a plan.
8. What Are the Main Ways Value Can Reach a Token?
Protocols have a few established routes for connecting income to a token. The first is a buyback, in which revenue is spent on purchasing the token from the market. The second is a burn, in which tokens are permanently removed from circulation, reducing supply so that each remaining token represents a larger share of the whole. The third is a direct distribution of revenue to holders, often to those who stake or lock their tokens.
Each route carries different trade-offs. Burns and buybacks are indirect and depend on market demand to translate into a higher price. Direct distributions are more explicit, but they are also the design that earlier legal caution steered teams away from. DiFrancesco's remarks did not endorse one route over another; his emphasis was on having a mechanism that is rule-based and tied to real protocol income.
The distinction matters for governance as well. Tokens that are staked or locked to earn a return also encourage holders to stay engaged, which can improve participation in votes that many DAOs struggle to keep above quorum.
9. What Happens Next?
No deadline was attached to his comments, and they should be read as one executive's view rather than an industry rule. Several developments will shape how far the idea spreads: whether the SEC's staff guidance is formalized or revised again, whether more large protocols follow Uniswap in activating fee mechanisms, and how the Safe governance dispute is resolved.
For investors, the practical effect is a new question to ask of any governance token: does the protocol earn money, and is there a defined, rule-based path for some of that value to reach the token? For project teams, DiFrancesco's view suggests that silence on the subject will increasingly be read as a choice rather than as a legal necessity.
Regulatory conditions can still change, and the staff statements cited are guidance rather than binding rules. Teams weighing buybacks or fee distributions will continue to need legal advice specific to their structure and jurisdiction.