From 'Standard' to 'Baller': The Foundation Model is Approaching Sunset

Original Article Title: "From 'Standard' to 'Burden': The Foundation Model Is Approaching Dusk"

Original Article Author: Fairy, ChainCatcher

Original Article Editor: TB, ChainCatcher

Eleven years ago, the Ethereum Foundation was registered in Switzerland, setting the early paradigm of cryptographic project governance structures. In the era of "multi-chain deployment," the foundation became a "standard" for Layer 1 projects—decentralized, nonprofit, community-serving. These labels were once hailed as the "governance gold standard" for blockchain projects.

However, a recent article by a16z titled "The End of the Cryptocurrency Foundation Era" has reignited people's thoughts on foundations. The idealized structure's real-world challenges are gradually being exposed, and the foundation's halo is quickly fading.

When Ideals Meet Reality: The Foundation Model's Out-of-Control Sample

The idealized foundation, with a strong moral halo, was seen as an indispensable bridge between project inception and self-governance. But as many projects have entered maturity and scalability stages, this mechanism has also begun to show signs of structural fatigue. Internal conflicts, resource misallocation, weakened community engagement... More and more project foundations are experiencing governance imbalance issues in their actual operations, amplifying the gap between ideal and reality.

The Arbitrum Foundation once allocated a large amount of ARB without receiving DAO approval, triggering strong community opposition. The foundation provided poor communication as an explanation. The Kujira Foundation faced a series of liquidations and token price crashes due to leveraging KUJI tokens, eventually handing over the treasury to the DAO for management. The Ethereum Foundation has been criticized multiple times for high-level ETH sales, low efficiency, and inaction. Although it has recently begun reforms, doubts have not been dispelled.

In terms of power structure, the early Tezos project became embroiled in long-term internal strife due to power struggles between the foundation and the founding team. This not only delayed the coin issuance process but also led to investor lawsuits. Similar situations have also occurred in the Cardano Foundation, which has been accused of marginalizing founder Charles Hoskinson and lacking proactive action in key affairs such as on-chain governance and charter drafting.

It is evident that some current foundations face issues such as opaque governance processes, blurred power structures, weak fund management and risk control, and insufficient community participation and feedback mechanisms. Against the backdrop of a friendly regulatory environment and rapid industry changes, does the foundation's role and governance model need to be reassessed and upgraded?

The Invisible Beneficiary Network and Token Destiny

In the actual operation of cryptocurrency projects, the roles of the Foundation and Labs have gradually formed a structural paradigm: the Foundation is responsible for governance coordination, fund management, and ecosystem funding, while technical development is usually undertaken by independent Labs or Dev companies. However, behind this may lie an increasingly complex reality of intertwined interests.

According to crypto KOL "CryptoFearless," behind North American projects such as Movement, a specialized Foundation "architecture output group" has been formed, consisting of lawyers and traditional compliance advisors. They provide projects with a standardized "Labs + Foundation" template, helping them with compliant coin issuance, designing governance structures, and deeply participating in key matters such as airdrop rules, ecosystem fund allocation, liquidity partnership, and other critical issues.

However, these directors are usually not original project members but are named in key Foundation positions with salaries of hundreds of thousands of dollars per year. Without deep involvement in product development, they hold substantive "compliance veto power," and even influence the flow of key resources.

We have compiled a group of public chain projects with active and highly engaged Foundations in the past year and calculated their token's market performance in the last three months and one year:

From the overall data, most Foundation-led project tokens have experienced varying degrees of decline in the past three months, and their yearly performance has also been lackluster. However, this trend is also influenced by the overall bearish market trend of altcoins.

According to crypto KOL "CryptoFearless," two projects ranking in the top 200 by market capitalization plan to dismantle their Foundation structure and directly merge into Labs in the second half of this year. As the two main organizational forms of crypto projects, the Foundation and corporate structure each have their own emphasis: the Foundation emphasizes non-profitability, decentralization, and ecosystem governance, while the corporate structure is efficiency- and growth-oriented, focusing on business development and market value growth.

Meanwhile, a16z also stated in their article that the development company model can more accurately mobilize resources, attract talent, and rapidly respond to changes. With the warming trend of US stock listings and the increasing correlation between coins and stocks, a company-led governance structure seems to have more advantages.

So, are some Foundations already on the countdown to exit?

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