Accounting for startup financing from Pipe

In many, if not most, seed- and early-stage funding scenarios, the investments are structured in LIFO order: last in, first out. The technical term for this is the liquidation waterfall, because in a liquidation—whether good, as in a large buyout, or bad, as in a distress sale—investors and others are paid out in a specified order.

Because the bank loan takes five years to pay off, the seller receives only interest and there are no cash flows available after debt payments for the first four years for either Randy or his investors. In year 5, the model imagines a hypothetical sale at the acquisition multiple; the sale provides the funds to repay the remaining debts and leaves

• Cryptonetworks are not companies. Income/expense/profit metrics generally do not logically apply at this level. We can try to assess the profitability of all token holders, and/or subsets of them.


• PoS issuance to stakers is not a “cost to the network,” and it isn’t even a net