On March 17, the SEC and CFTC jointly published Interpretive Release No. 33-11412, a 68-page document that did something the crypto industry had been begging for since 2017: it drew actual lines. Not enforcement actions disguised as guidance. Not speeches that contradicted each other from one commissioner to the next. Lines.
The release classifies crypto assets into five categories, declares that staking, liquid staking derivatives, wrapping, and qualifying airdrops fall outside securities law, and introduces a “separation doctrine” that gives projects a defined off-ramp from investment-contract status once they decentralize. Chairman Paul Atkins said the quiet part loud: “Most crypto assets are not themselves securities.”
We’ve read the release cover to cover. The legal analysis has been done to death by every law firm with a blockchain practice. What hasn’t been explored yet is this: what can you actually build with these new rules?
Below are three token-based fundraising and treasury models that were legally impossible, or at least legally terrifying, before 33-11412. None of them are SAFTs. None rely on token sales. All of them treat the native token as a commodity from day one and use only the activities the SEC just cleared. We ran simulations on each, and the numbers hold up better than most 2021-era tokenomics ever did.
What Actually Changed (the 90-Second Version)
For readers who haven’t waded through the release, here’s what matters for protocol design:
Native tokens of functional, decentralized networks are digital commodities. Bitcoin, Ethereum, Solana, Cardano, Chainlink, and at least ten others are named explicitly. If no single person or group controls a network’s operations, economics, or upgrades, the native token is probably a commodity under CFTC jurisdiction, not the SEC’s.
Staking is administrative, not a securities offering. Self-staking, delegated staking, custodial staking, liquid staking, all of it. Rewards come from programmatic rules, not from a team’s managerial efforts. Lido’s stETH, Rocket Pool, Jito, and every other LSD protocol just got a regulatory shield.
Liquid staking receipt tokens are not securities. They’re one-for-one receipts evidencing ownership. Trade them on DEXs, use them as collateral, bridge them, whatever. No registration needed.
Wrapping is safe. Deposit an asset, get a wrapped version. As long as it’s one-for-one and redeemable, the wrapped token is not a security.
Qualifying airdrops fail the Howey test. No consideration from recipients means no “investment of money.” Community drops, retroactive rewards, testnet airdrops, all clear.
The separation doctrine gives projects an exit. Once promises are fulfilled, code is open-sourced, and the network decentralizes, the token separates from any prior investment contract. Secondary trading becomes non-security activity.
That’s the toolkit. Now here’s what you can build with it.
Model 1: Liquid Genesis Staking Pools (LGSP)
“Stake-to-Own the Network”
This is probably the most immediately deployable model here. It could ship on Ethereum or Solana in weeks using existing audited staking contracts.
How It Works
On day one, users stake blue-chip commodities (ETH, SOL, wrapped BTC, USDC) into a non-custodial pool. They immediately receive a liquid staking receipt token, the exact kind of instrument 33-11412 just cleared. The pooled capital becomes the protocol’s bootstrap treasury and liquidity. In exchange, stakers earn two streams:
- Normal yield from the underlying assets (standard LSD returns)
- Pro-rata emissions of the protocol’s native commodity token, minted programmatically as staking rewards, with no sale, no consideration
Once the network hits predefined decentralization milestones (node count, open-source code, live governance), the separation doctrine kicks in and the commodity token trades freely.
The Economics
The “fundraise” is locked TVL, not sold equity. Protocol revenue from fees, MEV, or deployed yield gets split:
- 50% auto-compounded back into the staking pool, boosting LSD yield
- 30% used to buy back and redistribute native tokens through staking rewards only
- 20% to treasury for grants and operations
We ran a 12-month simulation starting from $10M TVL with a 5% LSD base yield, 20% annual token emission relative to TVL, 10% protocol revenue, and 2% monthly organic TVL growth. By month 12, the TVL reached roughly $13.3M. The circulating token supply hit about 116M tokens. Market cap landed around $2.5M with a token price near $0.02.
Early stakers capture upside while the protocol gets instant, sticky capital. Zero legal friction.
Why It’s Compliant
Pure protocol staking plus LSD issuance plus commodity-token rewards. No offer or sale of a security. If the team never promises profits, it stays clean even before separation. The SEC’s own language in the release says rewards are payments in exchange for services provided to the network, not profits from managerial efforts.
Model 2: Commodity Pre-Participation Agreements (CPAs)
The SAFT Killer
SAFTs were an awkward compromise. They acknowledged the token might be a security at launch and tried to paper over the gap with a promise of future utility. CPAs skip the problem entirely.
How It Works
Instead of selling tokens, the project issues irrevocable network participation rights as smart-contract NFTs or wrapped receipts. Contributors earn these rights by providing:
- Capital (staked into the protocol)
- Liquidity provision
- Work (running nodes, building integrations, community development)
These rights are wrapped commodities that automatically convert into the native token only after publicly verified decentralization milestones, exactly the trigger the separation doctrine describes.
Different contribution types get multipliers:
- Capital staker: 1x
- Node operator: 3x
- ZK-proof verified builder: 5x
Users can trade the wrapped rights on any DEX before conversion. They’re treated as commodities the whole time.
The Economics
There’s no fixed cap or price. Allocation is dynamic based on actual contribution value. Vesting is milestone-based, not time-based, which means incentives align with genuine decentralization instead of calendar dates.
Total supply of 1B tokens might break down as:
- 40% reserved for CPA conversions
- 30% ongoing staking and airdrop rewards
- 20% protocol treasury, released only post-separation
- 10% liquidity bootstrapping
Early participants “pre-mine” their allocation through real work and capital while the project raises actual resources without ever selling a security.
The CPA model starts with a $5M initial contribution raise, giving it an immediate war chest. With a 50% ongoing treasury allocation and flat 10% emission cap, our simulation showed treasury staying above 29 months of runway through the first year. By month 12, TVL reached $13.5M, and token price sat around $0.46. Dilution over five years stayed at only about 40%, the best price performance of all three models.
Why This Actually Works
The SAFT had a structural contradiction: you’re selling something and simultaneously arguing it’s not the thing you need registration to sell. CPAs sidestep this. You never sell the token. You incentivize contributions through wrapped commodity rights that convert post-decentralization. The SEC’s release says wrapping is safe, staking is safe, and separation gives you the clean break. CPAs chain all three together.
Model 3: Separation-Accelerated Revenue Rights (SARR)
The Decentralization Bond
This one is the most intellectually interesting because it turns the separation doctrine from a legal off-ramp into an economic primitive.
How It Works
Early supporters (stakers, LPs, or contributors) receive wrapped revenue commodity rights, a claim on a percentage of all protocol fees, paid exclusively in the native commodity token.
The mechanism that makes this novel: the revenue share automatically decreases every time a decentralization milestone is hit and verified on-chain. The formula is simple:
Revenue share at time t = Initial share x (0.75)^m
Where m = number of completed milestones. Start at 10% of fees going to early holders. After the first milestone, it drops to 7.5%. After the second, 5.6%. After the third, 4.2%.
This creates a direct economic incentive for the team to decentralize fast, because decentralization triggers the separation doctrine sooner and makes the underlying token trade freely, expanding the market and increasing volume-based revenue even as the per-unit share shrinks.
Holders can wrap and trade these rights on DEXs from day one.
The Economics
The model creates a “decentralization bond” market. The price of rights rises as milestones approach because the revenue share is front-loaded. Protocol revenue stays inside the token ecosystem (no external stablecoin payouts). Post-full separation, rights convert 1:1 into the native token or expire.
In our simulation, SARR showed the strongest long-term treasury sustainability. By month 45, the project achieves positive treasury, with growing runway thereafter. By month 60 (five years), the treasury covers 6-7 months of operating expenses and is still growing. Dilution stayed around 49% over five years. The decay function means every milestone literally pays the dev team more, since less revenue flows to early holders and more stays in the treasury.
Why SARR Might Be the Best Model for New Protocols
It solves the biggest problem in crypto: aligning the founding team’s financial interests with actual decentralization. Under the old regime, founders had every reason to maintain control, because that’s where the value accrued. SARR inverts this. Centralization is expensive (high revenue share to early holders). Decentralization is profitable (lower share plus freely tradable commodity token).
Can These Models Actually Fund a Real Team?
This is the question that kills most novel tokenomics. Elegant mechanisms that can’t pay ten engineers and an auditor are academic exercises.
We ran 60-month projections for all three models using these assumptions:
- Team of 10, fully loaded at $3M/year for Years 1-2, tapering to $2.5M in Year 3 and $2M in Years 4-5 as community contributors scale in
- $10M starting TVL
- 8% annualized protocol revenue capture (conservative for Aave/Lido-class protocols)
- 2.5% monthly organic TVL growth
- Emission caps that taper over time (15% to 10% for LGSP, flat 10% for CPAs, 8% for SARR)
- Buyback logic: when runway exceeds 6 months, 50% of excess treasury buys back and burns tokens on a DEX
The honest answer: all three models are tight in Year 1. At $10M TVL, protocol revenue starts around $800K/year, well below the $3M dev budget. This isn’t unique to these models. It’s the reality of bootstrapped DeFi. Lido didn’t become self-sustaining overnight either.
But by Year 4-5, TVL compounds to roughly $44M, generating around $3.5M/year in revenue. At that point, all three models become self-sustaining. CPAs get there fastest thanks to the $5M initial raise. SARR builds the most durable long-term treasury because the revenue decay function channels increasing fees to the project as it decentralizes.
The buyback mechanism matters here. When treasury exceeds 6 months of runway, excess capital buys and burns tokens. This creates a positive feedback loop: higher TVL produces more revenue, more revenue builds treasury, excess treasury supports price, higher price makes staking more attractive, which grows TVL further. It’s the same flywheel Maker and Lido use, just built into the model from genesis.
For the bridge period (roughly months 1-18), projects using LGSP or SARR would pair with a small strategic round under the startup exemptions Chairman Atkins has proposed, or simply launch with enough initial staking deposits to generate adequate revenue. CPAs solve this natively with the initial contribution raise.
What About the Caveats?
We’d be doing the reader a disservice if we didn’t flag the risks.
33-11412 is interpretive guidance, not statutory law. It’s the SEC’s view of how existing law applies. It doesn’t bind courts, and a future commission could revise it. That said, revising a jointly issued SEC/CFTC interpretation would be politically expensive and legally complex. This is about as durable as non-legislative guidance gets.
Promissory language still triggers Howey. If your whitepaper says “our team will work to increase token value,” you’ve probably created an investment contract regardless of how clever your staking mechanism is. The models above only work if the team avoids profit promises and lets the protocol’s programmatic design speak for itself.
Centralized control is still the red line. If a team retains operational, economic, or voting control, the asset may remain an investment contract. The separation doctrine rewards genuine decentralization, not cosmetic governance.
Antifraud rules apply. Misrepresentations, pump-and-dump schemes, and failure to deliver still trigger enforcement. AML, tax, and state-level regulations still apply. The SEC cleared specific activities, not all behavior.
DeFi TVL sits around $95B as of March 2026, with $68B on Ethereum alone. The market absorbed a significant correction in February (DeFi TVL dropped 12% in dollar terms), but ETH deposited in protocols actually increased by 2.7 million ETH during the downturn. Capital is rotating into yield-bearing positions. The regulatory clarity from 33-11412 should accelerate this, but “should” and “will” are different words.
What Comes Next
The 33-11412 release is open for public comment. CFTC rulemaking on commodities oversight is still pending. Congressional market structure legislation is working through committees. There’s a gap between the guidance we have and the statutory framework we’ll eventually get.
But the gap is navigable now in ways it wasn’t two weeks ago. Protocols can design around the five-category taxonomy instead of guessing. They can use staking, wrapping, and airdrops as fundraising primitives without wondering whether each one is a potential enforcement action. And they can build toward the separation doctrine as a defined milestone rather than a vague aspiration.
The three models above aren’t theoretical. Every component, staking pools, LSD issuance, wrapped receipts, programmatic rewards, milestone-gated conversion, on-chain revenue sharing, exists in production today across multiple chains. What didn’t exist was the regulatory clarity to combine them into coherent fundraising mechanisms.
Now it does.
The next few months will reveal whether founders actually use this window or keep incorporating in the Cayman Islands out of habit. If we had to bet, we’d say the first LGSP or CPA launches on Ethereum before June. The regulatory runway is there. The smart contract infrastructure is there. The institutional capital that’s been sitting on the sidelines waiting for exactly this kind of clarity is there too.
The question isn’t whether these models work on paper. It’s who ships first.
