From Monetary Dilution to Equity Dilution: The Missing Mechanism in Modern Wealth Distribution and an Institutional Framework for Contribution-Generated Assets

This paper introduces equity dilution as a structural mechanism in modern wealth distribution. In asset-dominant economies, when participation in the generation and issuance of incremental productive claims—and the capture structure of their capitalized upside—is not institutionally opened to broad value creators, asset growth can concentrate along the issuance chain even when economic participation is widespread. This mechanism is distinct from monetary dilution: monetary dilution primarily erodes purchasing power through prices and asset-pricing channels, while equity dilution erodes relative upside participation in newly generated productive assets. To make issuance participation auditable and falsifiable, we propose an institutional framework built on Contribution-Generated Assets (CGA), where new claims can be generated endogenously from verifiable contribution under hard-budget constraints and auditable settlement, while secondary-market acquisitions are excluded as contribution sources. We then outline a three-layer reconstruction route spanning a transaction-layer hard-budget distribution rule, a macro feedback mapping, and an execution/governance weight layer with source constraints and monotone enforcement to mitigate “buying power” and path dependence. Operationally, we provide minimal deployable metrics for issuance participation and capture, a one-line Minimal Verifiable Data (MVD) schema enabling third-party recomputation of budget and consistency constraints, a misuse firewall with non-bypassable guardrails, and a Minimal Empirical Demonstration template connecting institutional activation to standard DiD/event-study designs and directional decision rules. The paper is non-normative: it offers a mechanism explanation, an implementable reconstruction direction, and a falsifiable research agenda for financial innovation.