When offered a role at a crypto company, a significant part of your compensation package could be made up of the company’s native token. This can be a tempting offer, but it’s essential to weigh the pros and cons before making the best decision for yourself. In this article, we’ll explore the advantages and disadvantages of accepting equity as part of your compensation package.
- Potential for a significant return on investment – One of the most significant advantages is the potential for a significant financial return if the startup becomes successful. As an early employee, the value of your tokens can grow significantly if the company achieves success, resulting in a substantial payout.
- Aligns interests – Accepting native tokens aligns your interests with the company’s interests. You have a vested interest in the company’s success, which can lead to a more significant commitment to your work and an increased focus on the long-term goals of the company.
- Motivation – Accepting native tokens can be a strong motivator, as it provides a direct financial incentive for the company’s success. This motivation can lead to increased productivity, creativity, and innovation, which can ultimately benefit the company.
- High risk – Early stage startups are inherently high-risk ventures. There is no guarantee that the company will be successful, and if it fails, your tokens may be worth nothing.
- Lack of liquidity – Your tokens may not be liquid, meaning that you won’t be able to sell them easily or access their full value. You may be forced to hold onto them for an extended period, which could make life difficult if you rely on selling your tokens to finance your day-to-day expenses.
- Uncertainty – Early stage startups can be unpredictable, and it’s challenging to predict their future success. There is always the risk that the company may not achieve its goals or may pivot in a direction that results in lower token utility, resulting in a lower payout for token holders.
In conclusion, accepting native tokens as part of your compensation package when working for a very early stage startup can be a high-risk, high-reward decision. While it can provide significant financial benefits if the company succeeds, there is always the risk that it may be worth nothing if the company fails. Before accepting native tokens, it’s crucial to evaluate your risk tolerance and consider your financial needs to make an informed decision.