April 20, 2023

How to Prepare Token Cap Table With a Free Template


This guide will be useful for Web3 entrepreneurs building and collaborating on Web3 projects, and especially helpful for:

  1. investors with token warrants / token side letters. This guide will help them to answer the question: “How many tokens will I receive when tokens are issued?” or, more specifically: “How many tokens will I receive in accordance with the token warrant / token side letter at the time when tokens are issued, e.g. when deployment of the blockchain protocol with a native token into the mainnet blockchain network happens?”
  1. Web3 entrepreneurs and contributors who received token options in the early stages of a project. This guide will help them to calculate the number of tokens that they’ll receive at the time of token issuance and converting token options.

This guide also contains a free Token Cap Table template. This is a table with pre-determined formulas that helps simulate the calculation of tokens when token conversion of warrants / options occurs. The Token Cap Table template can be downloaded by filling out the form on this page.

This guide also includes rules for using the template so that the formulas work correctly, as well as a step-by step guide on how to use this template.

Watch our intro video about the template and why is it important to use Token Cap Table for a Web3 project:

Please note, everything contained in this article and in the Token Cap Table template is for informational purposes only and is not to be considered as legal, financial, investment, or any other advice or legal opinion.

This article is brought to you by the Legal Nodes team. Legal Nodes is a legal platform that helps global businesses and Web3 projects create global legal structures and stay compliant with regulations as their businesses grow. We’ve helped many Web3 founders structure their Token matters, from issuance to token analysis and token opinion. Speak to us to learn more.

Why is it better to use converting documents in the early stages of the Web3 project? 

(And why you shouldn’t just do a pre-sale of a fixed number of tokens and at a predetermined price.)

Documents used to convert tokens can include some very complex formulas, so is it really worth the hassle when you could just simply sign a token pre-sale agreement, specify a fixed number of tokens and determine their value for your prospective investor?

Here, there are two things to consider: project valuation and regulatory compliance.

Project valuation with predetermined tokens prices

By determining the value of the token at an early stage (for example, $1 for 1 token), as well as determining the hard cap of tokens (for example, a hard cap of 100 million tokens), the Web3 project’s team automatically “prices” their project and fixes its capitalization. Using the figures above as an example, the capitalization of the project will be 100 million dollars, which is quite a high estimate. As this estimate is being produced at a very early stage of the project, it can be quite risky, as future investors may not agree with the valuation. This may also create negative consequences for existing investors, as the down-pricing of the project in future rounds will result in losses. So, in summary, predetermining token prices might seem straight forward, but it can actually be more problematic than helpful.

Regulatory compliance requirements for tokens with predetermined prices

By assigning an initial price to tokens, as well as controlling the issuance/distribution/reissuance of tokens, Web3 founders are inadvertently demonstrating that the project is somewhat “centralized” in nature. The impact of this is that Web3 founders will be forced to take on the risks associated with the regulatory uncertainty that concerns tokens in some jurisdictions. In some cases, Web3 founders may be found liable for issuing an asset without proper authorizations or licenses, if the regulator were to determine that such authorizations were necessary.

Therefore, following the concept of "sufficient decentralization", it is safer to solve the issue of the initial issuance and distribution of tokens through decentralized governance. This can be done at the level of the decentralized blockchain network in which the project is launched, and the question of the price of the token is better solved using decentralized liquidity pools.

Thus, for founders who are building a Web3 project with the aim of achieving sufficient decentralization in matters of ownership and governance of both their project and the tokens, the use of a token warrant will be a more convenient option for early fundraising. This document does not require determining the token hard cap and price token at this stage of fundraising.

💡 Worth checking: Issuing Tokens: How to Choose the Best Country, Set Up Your Legal Strategy and Get It Right

What is the structure of the Token Cap Table?

The Token Cap Table includes two types of data:

  1. input data: these are the numbers and other information that founders insert into the document in order to simulate various scenarios of token distribution);
  2. output data: this is the calculation of the number of tokens on the basis of the received input data, using the formulas already built into the table. The formulas will be described by the converting documents (the token warrant or token option) and are incorporated into the Token Cap Table. The table will then automatically generate the output data.

To ensure output data is correct, it is fundamental that the input data is correct. Let’s explore the best way to fill out the Token Cap Table, using the steps below.

If you prefer video guides, you can also watch our walkthrough of how to fill out this Token Cap Table Template.

Disclaimer: this Token Cap Table template uses the same conversion formulas and terminology as the token warrant and the token side letter templates by Legal Nodes. Other types of legal documents might not be compatible with this Token Cap Table. 

Step 1: filling in general data about the project tokenomics

The Token Cap Table is written in Google Sheets or Word Excel format. It contains three tabs, each with unique formulas.

The first tab is called “Token Cap Table”. It contains the following information:

  • token hard cap which indicates the maximum number of tokens that will be issued in the network
  • types of token pools in which all hard-capped tokens are distributed (pool for core contributors and investors, community pool, reward pool for validators/oracles, reserve fund / liquidity pool, etc.)
  • members of the Web3 project ecosystem who are granted the allocated tokens according to different pools (core contributors, investors, contributors, validators, oracles, and other members of the Web3 project ecosystem)
  • the methods used to distribute tokens from relevant pools to ecosystem participants (token warrant / token option, token incentive plan, token grants, on-chain permissionless rewards, etc.)
  • owners of token pools which are the entities of the ecosystem responsible for the distribution of the respective token pools: DevLab, Token SPV, DAO, Token Foundation, AMM, etc.

When working with this Token Cap Table tab, users of this document must correctly enter the following information:

  1. token hard cap
  2. the list of token pools and the distribution of hard cap in % between established token pools
  3. the price of the token at the time of the token generation event (TGE)
  4. capitalization of the DevLab, which is the total number of shares of the DevLab  BEFORE the conversion of any convertible equity investment agreements / price round. Ideally, this information will automatically be pulled into the Token Cap Table from the Equity Cap Table. For convenience, DevLab's Equity Captable can be placed on a separate tab within the same sheet/excel.

For the convenience of filling out the Token Cap Table template, the input data related to tokens is highlighted in blue (for example, the token hard cap), and the data related to equity is in yellow (for example, the capitalization of the DevLab). The third category of data, which does not influence the distribution of the tokens directly but is still helpful for token-based fundraising, is highlighted in green (the price at the TGE).

Also, it is essential to note that the initial price of the token is data that is used only for modeling calculations of future token conversions. It is not recorded in legal documents signed by core contributors and/or investors. At the time these contracts are signed, this price is not yet known, so this input is used to see how much—hypothetically—future token holders will have to pay for their tokens.

Token Cap Table tab of the template

Step 2: filling in data on shares of investors, core contributors in DevLab, and token discounts

After completing the work on entering general data about the project tokenomics, we’re ready to move to the next part of the Token Cap Table that requires input data; the “Core Contributors and Investors” tab.

This is the part with information about the shares of investors and founders of the DevLab (the company that signed the SAFEs + token warrants / token side letters), as well as data about discounts provided in token warrants / token side letters.

Since the early rounds of Web3 projects are usually structured by a combination of SAFEs + token warrants, it is most convenient to structure the collection of data for this section of the cap table as follows:

Core contributors (founders):

  • information about their number of shares in DevLab should be taken from stock certificates / Stock Purchase Agreements (SPA), by which they received shares in DevLab (it is best if this information is automatically pulled from the Equity Cap Table).
  • information about the token discount should be taken from the token option, which was signed as an addition to the SPA / Shareholders Agreement.


  • information about their number of shares in DevLab should be determined through the calculation of the SAFE / Convertible Note conversion (for this, you can use equity calculators for SAFE conversion calculations, which are widely available online or built into cap table management software services).
  • information about the token discount should be taken from the token warrant / token side letter.

When working with the Token Cap Table, it's essential to understand the difference between the Discount and the Discount Rate. The latter is entered into the table and the formula used to calculate this Discount Rate is (1-Discount)%. For example, if core contributors have to buy tokens with a 99.5% discount, a Discount Rate of 0.05% is entered into the table. This is necessary to synchronize the terminology and formulas provided in the SAFE, token warrant, and Token Cap Table template.

Core Contributors & Investors tab of the template

Step 3: Fill in data on the pool distribution for early contributors, team members, and advisors

The final tab is called “Teams & Advisors”. Here, the input data will help calculate how the pool will be distributed as a percentage among DevLab team members, advisors, and other early project contributors who were issued token options or token grants as part of the Token Incentive Program.

Separate tabs for validators, oracles, and community are not provided in the Token Cap Table template, as this distribution typically occurs in a decentralized manner according to the rules laid out in the blockchain protocol and approved by the network validators themselves.

Team & Advisors tab of the template

Step 4: Obtain token calculations based on the results of token warrant / token option conversions

If all the required data that we’ve discussed above is inputted correctly, then the Token Cap Table will automatically calculate the number of tokens for investors and contributors in the first tab “Token Cap Table” under the Token Allocation section. This will allow investors and contributors to better understand the number of tokens they can count on when the blockchain protocol will be launched and tokens will be minted. Additionally, this calculation allows us to legally structure the process of distributing tokens and the process of acquiring ownership of tokens by contributors and investors. This plays an important role in the future when tokens increase in value, and platforms for exchanging/selling such tokens start asking about the source of the tokens.

In addition to the aspects described above, a properly forecasted and designed Token Cap Table will help analyze tax implications arising at the time of token warrant / token option conversions into tokens, and later on, at the moment of token liquidity (when the token lock-up periods end).

Token Allocation section (Token Cap Table tab)

Avoid these mistakes when using the Token Cap Table template

Today, the Web3 industry features a wide variety of approaches to tokenomics, various blockchain networks for launching Web3 projects, and different jurisdictions for registering DevLabs. This diversity makes it almost impossible to create a universal Token Cap Table template. With this in mind, please take note of the following disclaimers to help avoid mistakes in token calculations or incorrect operation of formulas in the Token Cap Table template:

  1. The Token Cap Table template uses terminology and formulas described in the token warrant / token side letter templates published earlier in 2023 on Legal Nodes. It is possible therefore, that this Token Cap Table may not work in conjunction with other token conversion document templates published by other organizations.
  1. The conversion formula is based on the equity cap table of the project company (DevLab) on whose behalf token warrants / token side letters were signed. The conversion itself only uses the token pool for core contributors and early investors, as opposed to the entire token hard cap, as is sometimes provided in some token warrants / token options.
  1. Before using the Token Cap Table template, Web3 entrepreneurs who have signed token warrants with investors in connection with SAFE / Convertible Note must correctly calculate the conversion of investor SAFEs into shares, as these figures will be used to calculate token conversions. The Token Cap Table template includes conversion formulas for tokens only and no conversion formulas for SAFEs / shares are present in this template. It is assumed that Web3 entrepreneurs independently calculate share conversions, for example, by using SAFE conversion calculators available online. For convenience, consider doing equity calculations in the same document but on a separate sheet.
  1. This guide, as well as the Token Cap Table template, is blockchain-agnostic and country-agnostic. This means that the equity conversion rules according to SAFE / Convertible Note may change depending on the jurisdiction of the company that signed them, and the token conversion rules, as well as the token pools provided in the Token Cap Table template, may change depending on the specifics of the blockchain network in which the Web3 project with tokens is launched e.g., Ethereum, NEAR, Cosmos, etc.
  1. This information is not legal advice; therefore, in each case of using the Token Cap Table template, it is necessary to obtain qualified legal advice.

Our template uses a few assumptions about a Web3 project that will use the Token Cap Table. You can find these listed on the first tab in the template. Note that all of the assumptions have to be correct in order for the template to work. 

Get help with your Token Cap Table 

If you’d like help building out your best options for your Token Cap Table, synching it with your Equity Cap Table and applying it to your unique project, speak to us at Legal Nodes. We help Web3 founders figure out the best options for token issuance, as well as the best jurisdictions for setting up all necessary legal entities, from Token SPVs to DevLabs plus many other incorporation types.

You’re welcome to get started with our free Token Cap Table and contact us if you’d like additional support. Our network of legal experts spans 20+ countries worldwide, and our platform is perfect for working on multiple aspects of your Web3 projects, from early-stage fundraising, to advanced project works.

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