The Web3 Fundraising Instrument Stack: SAFE + Token Right, and Its Consequences

Founders ask "SAFE or SAFT or warrant?" as if the answer is a single instrument. In practice a Web3 raise is usually a stack: a SAFE for equity plus a token warrant or side letter for token upside. That stack has consequences on two ledgers at once, for the cap table, the accounting and the securities analysis, and each leg is its own counsel question. This is the cornerstone article for the fundraising cluster: it ties the individual instruments together and shows why they have to be analysed leg by leg. The pieces it draws on, the post-money SAFE, the token warrant versus side letter choice, the SAFT securities risk and token cap-table management, each go deeper on one part of the stack.

The stack in brief

• A Web3 raise is usually not one instrument but a stack: a SAFE for equity plus a token warrant or side letter for token upside.
• Each leg is a separate question, with a distinct securities classification, accounting treatment and cap-table consequence.
• Dilution is dual-ledger: the SAFE dilutes equity and the token right dilutes the token ledger, so model both together (see token cap-table management).
• The accounting differs per leg, with scope and treatment settled framework by framework with your accountant.
• There is no single correct stack; it is jurisdiction-, structure- and fact-specific, and the SAFT route carries the heaviest securities risk.
• Design it with securities counsel and your accountant, each leg on its own facts. Nothing here is legal or accounting advice.

The stack, not the instrument

The common pattern:

The investor holds both future equity and a token right. The word "stack" is the point: a Web3 raise is usually a combination, and the combination's legs have separate consequences. A SAFT is a different, single-instrument route, and it carries the highest securities risk.

Each leg is its own question

The equity leg (the SAFE) and the token leg (a warrant or side letter) are distinct instruments with:

• a distinct securities classification, economic-reality-tested, fact by fact;
• a distinct accounting treatment, with scope settled per framework;
• distinct cap-table effects, on two different ledgers.

A conclusion about one leg does not carry to the other. Bundling them in the analysis is a common error; see the instrument comparison.

Cap-table consequence: dual ledger

The SAFE dilutes the equity ledger on conversion; the token warrant or side letter dilutes the token ledger when it resolves. One raise touches both ledgers, so the fully diluted picture must be modelled across equity and tokens together; modelling only the equity side understates the true dilution. This is exactly why token cap-table management treats both ledgers as one combined picture.

Accounting consequence: per leg

Each leg is recognised under the framework appropriate to it once scope is settled: an equity-settled share-based payment versus other treatments for the equity side, and the separate question of how token grants and instruments are accounted for (see token vesting & cliff accounting and token compensation accounting). The stack does not share one accounting answer; each leg's scope and treatment is determined with your accountant, framework by framework.

There is no default stack to copy

The right combination depends on the jurisdiction, structure, token plan and investor base, and each leg's securities treatment is fact-specific and economic-reality-tested. The stack is a common pattern, not a template. The defensible approach is to design it with securities counsel and your accountant, each leg on its own facts.

Practical guidance

1. Plan the raise as a stack, an equity leg plus a token leg, not one instrument.
2. Analyse each leg separately, across securities, accounting and cap-table, with no cross-carry.
3. Model dual-ledger dilution: the SAFE (equity) and the token right (token) together.
4. Settle the accounting scope per leg with your accountant, framework by framework.
5. Treat the SAFT route distinctly, as a single instrument with the heaviest securities risk.
6. Design with securities counsel and your accountant; it is fact- and jurisdiction-specific and not legal or accounting advice.

Choosing a tool for the stack

Because a Web3 raise spans two ledgers, the configuration that matters in a cap-table tool is whether it can represent both legs of the stack and the dilution each causes, rather than the equity side alone. When you evaluate one, confirm that it models both legs and your specific terms and provides an audit trail across ledgers. Pulley models token and equity cap tables together, with custodian integration; Carta models the equity side broadly. Neither determines securities classification or accounting scope; those stay determinations for counsel and your accountant.

How Wag3s fits

Wag3s HR records the stack's instrument data, the SAFE conversion terms, the token-warrant and side-letter terms, and the grant and vesting schedules, as structured, auditable inputs feeding dual-ledger cap-table and equity- and token-compensation reporting. The securities and accounting treatment of each leg stays a determination for counsel and your accountant; Wag3s supports that work rather than replacing it. See the HR product page.

Further reading

• SAFE vs SAFT vs Token Warrant
• Post-Money SAFE Explained
• SAFT Securities Risk
• Token Warrant vs Token Side Letter
• Token Cap-Table Management
• Web3 Employee Token Grant Structuring

Sources

• Y Combinator — Safe financing documents and Understanding SAFEs and priced equity rounds: the equity leg of the stack, the post-money SAFE and how it converts and dilutes (see post-money SAFE explained).
• IFRS — IFRS 2 Share-based Payment and IAS 19 Employee Benefits: the accounting frameworks each leg may fall under once scope is settled, framework by framework.
• FASB — ASU 2023-08: US GAAP fair-value measurement of crypto assets, relevant to how a token leg interacts with the balance sheet.

The SAFT route and the token-rights instruments have no single official authority that defines their form or settles their securities treatment; classification is fact-specific and economic-reality-tested (see the SAFT securities risk and token warrant vs token side letter articles). There is no single correct stack: design it with securities counsel and your accountant, each leg on its own facts. Nothing here is legal or accounting advice.