By：@VannaCharmer

Crypto has recreated the worst aspects of multi level marketing schemes, but with native internet marketing and worse transparency. Tokens have, for the most part, evolved into a sophisticated pyramid where those at the top extract maximum value while retail investors get left holding worthless bags.

This isn't a coincidence, it's structural.

In traditional MLM schemes like Herbalife or Mary Kay, you have overpriced products that don't work particularly well compared to alternatives. The key difference from normal products lies in distribution: instead of selling through stores, individual distributors buy products upfront and then struggle to find actual customers who want to use them.

The focus quickly shifts from improving products to recruiting new participants. Everyone's buying because they expect to sell for more, not because they want to use the product. Eventually you run out of buyers because everyone purchasing hopes to flip for profit while nobody actually wants to use the product. The people at the top capture all the asymmetric gains while those at the bottom hold worthless inventory.

The Token pyramid

Crypto tokens operate on identical principles. The token is the product: an overpriced digital asset with questionable utility beyond speculation. Like MLM distributors, token holders aren't buying to use; they're buying to sell to the next person at a higher price.

The pyramid structure is similar to traditional MLMs, but with crypto's unique stakeholders forming its distinct levels. Tokens are a much better vehicle than traditional MLM products because they leverage the internet and networks much, much better. They're also easier to transact with and acquire. Flow goes something like this:

In trad MLM if you refer others and they sell, you profit from whatever they sell to others or purchase. Same thing happens with tokens. You get people to buy your bags + others who got in at a 'later' date than you did. This is good for you and everyone on top of them since it provides exit liquidity and makes number go up. By doing this you're also giving newly onboarded tokenholders an incentive to shill (Now they have bags!) and previous tokenholders an incentive to sell (their multiples go up!). Identical to MLM schemes, just much more powerful.

The higher you are in the pyramid, the more incentivized you are to keep launching tokens and engaging in this behavior.