For those who don't know, Token is a company that claims to be developing a debit card called "TokenCard" that allows users to exchange ethereum and other ERC20 tokens into fiat when purchasing items. Token recently had a fairly successful ICO that raised over $12.7 million in less than 30 minutes.
The problem, however, is that their business model makes absolutely no sense and will not allow the company to survive without the company burning or selling their own tokens. The root of the problem can be quickly identified in the fee structure provided in Token's whitepaper.
When a user swipes the TokenCard, a 1% transaction fee is incurred. This fee is then put into an account from which all holders of TKN profit from. TKN holders can redeem their share of the profits by burning their shares. The problem here is that no fees go to the company (Token) itself.
100% of all profit made from TokenCard swipes go to a fund that is shared among all holders, and this value can only be redeemed by burning your shares or selling your shares into the market. If none of the profit from the swipes goes into the pockets of the company itself, how will the company maintain cash flow to do basic things like keep the lights on and pay its employees?
The only method for Token to generate cash is to either burn their shares or sell them. Eventually, they will run out of shares to burn or sell, and end up with no stake in their own company. In conclusion, the business model outlined in their whitepaper is fundamentally flawed in such a way that the Token as a company cannot survive in its current form without burning their own shares in the company.
I would advise all to stay away.