What Is the Concept of 'Economic Dilution' When a Non-Equity Token Is Issued? ⎊ Path

What Is the Concept of ‘Economic Dilution’ When a Non-Equity Token Is Issued?

Economic dilution occurs when the issuance of a new, non-equity token siphons value, attention, and potential revenue away from the company's traditional equity. Even though the token doesn't legally dilute ownership, if the token's ecosystem becomes the primary growth engine, the value of the existing stock may grow slower than it otherwise would have.

This is a subtle form of value transfer from shareholders to token holders.

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