Why Web3 advisors shouldn't run funds

Advisor A says your valuation is too low. Advisor B says it is about right. Advisor C says it is too high. Advisor A writes you a cheque after the call. Advisor B does not. Advisor C was never going to write one.

Whose advice was the cleanest?

The Web3 default is the hybrid. The advisor is also the fund, often the KOL, and sometimes the market maker. Everyone wears three hats and signs a disclosure at the bottom of the pitch deck in 9-point font. Founders accept the model because the advisor has a brand and the 1-2% token allocation looks cheap against the doors the advisor opens.

The conflict is not that advisors want you to fail. They do not. The conflict is that every piece of advice they give you has a second-order effect on their own position, and you cannot see that effect from where you sit.

Take three common scenarios.

Valuation. Your advisor-investor got in early. Their entry price sets their upside. They have a structural incentive to keep the next round priced close to theirs, because it protects their mark and keeps their LP reports clean. You want the round to clear at the highest number the market will accept. Is your advisor giving you valuation advice, or protecting their own position? Both. But you cannot separate the two without being a fund yourself.

Launch timing. Your advisor-investor has unlocking tokens. Their carry is scheduled against a liquidity event. They want to launch sooner. You want to launch when the product is ready, maybe six months later. What does the timing advice say? You hear it as strategy. The advisor knows it is partly portfolio management.

Strategic partnerships. Your advisor-investor has seven other portfolio companies. Some of them want to partner with you. Some compete with you. The advisor's fund return is a function of the portfolio, not just your company. Which deals do they push? Which do they discourage? The advisor picks the answer that maximises the portfolio, and presents it as the answer best for your company.

None of that is fraud. None of it gets anyone prosecuted. Most advisor-investors are not doing anything worse than what the structure tells them to do. The structure tells them to optimise their fund's return, and their advice is a tool for doing that. When the advice happens to align with what is best for the founder, that is coincidence, not design.

Founders accept this because the alternative looks expensive. Pay cash for strategy when you could pay 1% of supply for strategy plus a cheque? But the cost of a retainer is knowable. The cost of conflicted advice is not. It shows up later, in valuation discipline that was off, in launches that happened too early, in partnership decisions that skewed wrong. Those costs compound. They never appear on the pitch deck.

The World Liberty Financial saga this month is the extreme version. WLFI's CTO, Cory Caplan, co-founded Dolomite, a lending protocol where WLFI tokens were used as collateral for a $75 million loan, according to reporting by the Daily Beast and Bloomberg. The CTO was also the counterparty. The token has lost over 74% of its value since August, per NBC reporting. Whether that counts as misconduct or as business-as-usual in Web3 is a separate question. The structure that enabled it is the point. When the advisor, the protocol, the lending counterparty and the executive are overlapping entities, independent advice does not exist in that room. It cannot.

The clean model is simpler. An advisor takes a fee for advice, disclosed up front, not tied to any financial position in the project. No token allocation. No warrant. No option. No placement fee. When the advisor says raise now, raise later, take this partner, reject that one, the only thing behind the sentence is their read of the situation. If they are wrong, you fire them and hire someone else. You do not discount their counsel for their book, because there is no book.

That is Mirae's model. The homepage says no fund, no portfolio, no conflicts. Those are not slogans. They are the commercial structure. Independent advisory costs more on paper than a dual-hat engagement. It costs less in practice, because the advice is decodable. You know what is in the sentence and what is not.

If your current advisor also holds your tokens, you already know which decisions you have not asked them about. Ask the ones you have been avoiding.