Story's co-founder is accused of "soft rug pull", with a daily on-chain IP protocol revenue of only $45 raising eyebrows in the encryption community.

The co-founder of the on-chain IP protocol Story, Jason Zhao, announced his resignation and transition to an advisor role, triggering a strong rebound in the crypto community, accusing him of "soft rug pull". Although the project secured over $130 million in financing from top venture capital firms like a16z and is valued at $2.25 billion, on-chain data shows its peak daily revenue was only $3,163, with recent 24-hour income dropping to as low as $45, creating a huge contrast with its claim of "hosting $61 trillion in IP assets". The core controversy lies in the massive token distribution to the founding team and Jason Zhao's potential cash-out of hundreds of millions of dollars, with industry pros like the founder of Hyperliquid speaking out against its dismal operational data.

Jason Zhao's Resignation Sparks "Soft Rug Pull" Accusations in the Encryption Community

On August 16, Jason Zhao, co-founder of Story, announced on social platform X that he would resign from his position as co-founder and transition to serving as a "strategic advisor" for the protocol. This news quickly sparked a huge uproar in the cryptocurrency community. Numerous crypto users and investors accused Jason Zhao of pulling out after the project secured massive funding and reached a high valuation, allegedly engaging in a "soft rug pull." Critics suspect that he chose to exit after gaining substantial personal benefits.

Developers Expose Dismal On-Chain Data, Popping the Bubble

A well-known crypto developer angrily pointed out that Story raised over $130 million from top venture capital firms such as a16z (Andreessen Horowitz), but its actual utility has been minimal. "Despite claiming to carry $61 trillion worth of IP assets on-chain, this blockchain protocol has only generated $45 in fee revenue over the past 24 hours," the developer emphasized. While founder departures are not uncommon in the crypto space, such a situation occurring after securing such a large funding commitment from top venture capital firms like a16z is indeed unusual. Although the specific impact of Jason Zhao's departure on core product development and team operations remains unclear, numerous comments under the announcement have classified it as a "founder-led exit" and widely sparked accusations of "Rug Pull."

2 Billion Dollar On-Chain IP Vision and Massive Financing Review

The white paper of Story positions it as a blockchain project aimed at revolutionizing intellectual property management through on-chain solutions. The platform seeks to discard outdated copyright frameworks, empowering creators to register and track their works (including books, movies, music, and AI-generated content) through a decentralized network and achieve profitability. According to its token economic model, Jason Zhao and three other co-founders control 20% of the total supply of 1 billion tokens, which is approximately 200 million tokens. If calculated at the current price of about $5.69, assuming Jason Zhao holds 5% of this (about 50 million tokens) and cashes out completely, his potential profit could reach approximately $284.5 million. The historical equity financing total of the protocol is approximately $134.3 million, specifically including:

• May 2023 seed round: financing of 29.3 million USD.
• September 2023 Series A: Financing of 25 million USD.
• August 2024 Series B: Led by a16z encryption fund, raising $80 million. After this round of financing, the company's valuation reached approximately $2.25 billion.

Founding Team Token Allocation Ratio Exposed Raises Concerns

In addition to a massive equity financing, Story also secured an $82 million Token investment from the publicly traded company Heritage Distilling on August 11. This funding is part of its broader $360 million IP Token reserve strategy, aimed at creating a dedicated IP Token treasury. Joseph Schiarizzi, founder of the lending protocol Nerite, condemned the plan, revealing that the Story team artificially inflated the IP Token price by 2% through dumping $150,000 worth of Tokens. "And they still think they can build a $300 million reserve for a treasury company?" Schiarizzi stated bluntly, calling the plan "a carefully designed scheme to Rug Pull on retail investors."

Hyperliquid founder criticizes the severe disconnection between protocol revenue and valuation

The founder of the yield protocol Harmonix Finance, based on Hyperliquid, has sharply criticized Story's dismal revenue data. According to DeFiLlama statistics, the protocol's highest historical daily revenue was only $3,163, while its fully diluted valuation (FDV) soared to $5.8 billion. This founder contrasted his own project Hyperliquid: "Hyperliquid did not raise a single cent in funding, and the founders and core contributors do not have glamorous backgrounds. However, we have created the top-ranked on-chain perpetual contract protocol, generating an average daily revenue of $3 million." This statement directly points to the serious mismatch between Story's financing amount, valuation, and actual output efficiency (Revenue/Valuation of the protocol).

Jason Zhao explains the reason for his departure and announces his successor

Since announcing his resignation, Jason Zhao has not responded to the overwhelming allegations. However, he explained in his initial post that his departure is related to the AI data infrastructure layer "Poseidon" he developed for the protocol, which focuses on applications in biomedicine and space research. Reflecting on his journey with Story, Jason Zhao described it as "the most meaningful experience of his life." He wrote, "It started with a sketch on a whiteboard when I was 22, and eventually evolved into results far beyond my imagination." He added that the Story IP has developed into a foundational protocol of intellectual property that includes French fashion brand Balmain and Korean K-pop group BTS, handling millions of transactions. Jason Zhao took this opportunity to introduce the upcoming leadership. According to his announcement, Story will enter its "second phase" under the leadership of new CEO S.Y. Lee and new Chief Product Officer Andrea (who was involved in Amazon's conversational AI project).

Conclusion

The resignation controversy of the Story founder highlights the core contradiction between the high valuations and high financing projects in the encryption field and their actual on-chain performance. The stark contrast between massive VC funding backing and a dismal daily income of $45, coupled with the founding team's holdings of large amounts of tokens, makes the doubts about "soft rug pulls" difficult to quell. This incident once again sounds the alarm for crypto investors: when evaluating projects, it is crucial to penetrate marketing narratives and delve into real on-chain data (on-chain income/protocol fees/user activity). The long-term value of a project ultimately needs to be supported by actual utility and sustainable income, rather than relying solely on financing stories and token economic models. Whether Jason Zhao's successor can lead Story to realize its grand vision and regain community trust still needs time and tangible on-chain performance to prove.