Definition ∞ Capital structure describes the specific combination of debt and equity financing an entity uses to fund its operations and growth. In the context of digital assets, this concept extends to how a protocol or project sources its financial resources. It details the various forms of funding, such as token sales, venture capital, or treasury allocations. Understanding this composition is vital for assessing a project’s financial health and risk profile.
Context ∞ Debates concerning capital structure in the digital asset space often involve the transparency and fairness of initial token distributions and ongoing treasury management. News frequently reports on fundraising rounds, tokenomics adjustments, and the allocation of protocol-controlled value. Evaluating these reports requires recognizing how a project’s capital structure influences its long-term viability and governance mechanisms.
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