What Is the Concept of ‘Skin in the Game’ for Founders and Its Impact on Cost of Equity?

'Skin in the game' refers to the founders and core team holding a significant, vested portion of the token supply. This alignment of interests reduces the agency risk between founders and investors.

The presence of 'skin in the game' can decrease the perceived risk for investors, potentially lowering the required cost of equity ($R_e$) in the DCF model, as it signals a long-term commitment to the project's success.