Author: Liu Honglin
Many years ago, blockchain projects had an almost unspoken "entrance ritual"—first register a foundation in an offshore location, then declare "non-profit," "open source," and "transparent" in the white paper, and repeatedly emphasize "community governance" and "distributed autonomy" during roadshows. With a foundation's endorsement, it seemed like the project was legitimate. But a decade later, a more interesting and realistic trend emerges: foundations are no longer the "orthodox approach," and project teams are actively embracing the corporate system, even going so far as to include tokens directly in the financial statements of publicly listed companies.
Whether it's Conflux injecting core assets through Hong Kong-listed company Linghang Pharmaceuticals, Tron renaming itself "Tron Inc." through a backdoor listing of small-cap Nasdaq-listed SRM Entertainment, or Sui's push for US-listed companies to allocate large amounts of SUI tokens for treasury management, Web3 projects are rapidly gaining traction, leveraging traditional capital markets to achieve a new valuation realization method. Amid this shift from aspiration to transactional activity, Nasdaq's proactive application to the SEC to list tokenized stocks has handed the industry the final "compliance key," poised to unlock the remaining half-closed door between crypto assets and mainstream finance.
The ideal shell has been replaced by the shell of the capital market
On July 28th of this year, US-listed company Mill City Ventures III announced the completion of a $450 million private placement, explicitly stating that it would allocate a significant portion of the raised funds to SUI tokens, transitioning to a "SUI Treasury Strategy." On August 25th, the company further announced its name change to "SUI Group Holdings" and its trading ticker symbol to SUIG. On September 2nd, they disclosed holdings of 101.8 million SUI tokens (approximately $332 million at that day's price). This is a very clear path: placing "tokens" within the purview of a "listed company," using annual reports, audits, and shareholder meetings to address the responsibilities and assets previously held by the foundation, though unclear. Notably, this is no longer a case of the Sui Foundation acquiring a publicly listed shell company, but rather a proactive shift by the listed company, integrating into the SUI ecosystem through brand reshaping and asset restructuring. This approach is completely different from the "foundation master key" of earlier years.
In early September, the Conflux Foundation launched a governance proposal authorizing its ecosystem fund to engage in treasury and financial collaboration with listed companies, imposing lock-up periods of at least four years. This wasn't a headline-grabbing announcement about a potential acquisition, but rather a clear and transparent integration of "dealing with listed companies" into the governance process. This meant gradually migrating token management, funding arrangements, and ecosystem support to a framework more accessible to traditional finance. The foundation's previously ambiguous approaches to fundraising, compliance, custody, and reputational endorsement now found a more robust vehicle.
On September 8th, Nasdaq took an even more crucial step. It proactively submitted an application to the U.S. Securities and Exchange Commission (SEC), explicitly seeking approval to list tokenized stocks. This move is far more significant than simply adding a new trading category to the exchange. Once the SEC approves, thousands of Nasdaq-listed companies could theoretically tokenize each share in a short period of time, seamlessly moving them to the blockchain. This will mark the first time the U.S. national market system has officially embraced blockchain technology, representing an institutional breakthrough that will truly break down the barriers between traditional Wall Street and the crypto world, leading to deep integration. This is driving the emergence of stablecoins as the optimal settlement medium, leading to explosive growth in demand and providing liquidity for the launch of tokenized stocks. Furthermore, STO (Security Token Offering) exchanges, which have been treading the fine line of compliance, will no longer be limited to niche assets. Instead, they will be able to meet the overflowing compliance needs of Wall Street and may even become a core hub connecting traditional securities and crypto assets.
Back to the underlying logic: Why are foundations withdrawing?
First, the structural conflict between profit and non-profit.
Foundations may be cloaked in the guise of a "nonprofit," but the vast majority of project teams are entrepreneurs, not institutions dedicated to producing academic papers. The essence of entrepreneurship is generating cash flow, providing incentives, and retaining talent. However, foundations are not naturally suited to equity or option incentives, nor are they well-suited to transparently attributing gains from token appreciation to individuals or operating entities. This creates a paradox: nominally a "charity," yet in practice a "disguised commercialization," forcing them to "time and sell" at market peaks to maintain operations. The more time passes, the more difficult the situation becomes.
Take the Ethereum Foundation (EF) as an example. Its 2024 financial report shows that EF's treasury assets total approximately $970 million, of which $789 million are crypto assets, the vast majority in ETH. Compared to the $1.6 billion disclosed in 2022, this represents a 39% decrease in two years (due to a combination of market volatility and expenditures). This doesn't mean EF is "troubled," but it serves as a reminder that the foundation's financial strength doesn't equate to the ecosystem's commercial capabilities, nor does it guarantee the ability to ensure a chain's commercialization and compliance within a regulatory framework. In reality, the expansion of the Ethereum ecosystem is driven by a group of corporatized teams: L2 projects, infrastructure developers, and development tools and service providers, not the foundation itself.
Second, governance efficiency and responsibility boundaries.
DAO voting is wonderful, but business competition waits for no one. A parameter upgrade, an ecosystem incentive, or a market window often takes hours to complete. Foundation and DAO governance often involve procedures, canvassing, and further discussion; the final outcome is likely just a compromise. In contrast, a corporate system: the board of directors, shareholders, and management each have their own responsibilities, with a clear decision-making chain and clear accountability when problems arise. Speed and accountability are the inherent advantages of a corporate system over a foundation.
Third, compliance identity and dialogue capabilities.
Regulatory requirements are never about "whether or not one is idealistic," but rather about "who is responsible," "how financials are calculated," and "how customer assets are managed." For example, the Hong Kong Securities and Futures Commission (SFC) licensing requirements for virtual asset trading platforms directly base the application on "company," setting standards and procedures around custody, compliance, auditing, and risk control. Negotiating licensing, banking partnerships, and trusteeship with a foundation is difficult; however, the logic is instantly resonant with a listed company. This isn't about technological triumphs; it's about a dialogue between institutional language.
If you put these three into the timeline, it will be more intuitive
In 2017, amid the ICO boom, the industry consensus was that "foundations equal orthodoxy." Around 2020, the Tezos Foundation reached a $25 million class-action settlement in the ICO dispute, serving as a warning to those using "foundations" as a shield: even if you're called a "foundation," it doesn't mean you can evade securities regulation. From 2022 to 2024, regulatory frameworks around the world gradually improved: US regulatory enforcement intensified, while Singapore and Hong Kong introduced clearer licensing and prudential rules. By 2025, SUI had established a bridge between tokens, listed companies, financial reports, and the capital market, and Conflux had incorporated "partnership with listed companies" into its governance agenda. Industry discourse shifted from the myth of foundations to the reality of the corporate system.
By this point in the story, you've probably come to a conclusion: foundations aren't bad; they simply can't solve today's core problems. Projects require efficiency, financing, organizational incentives, and interactions with banks, auditors, brokerages, and exchanges. They also require integration into the valuation and risk control systems understood by traditional finance. Foundations are "containers of vision," while companies are "containers of transactions." When blockchain projects truly enter the stage of deep integration with traditional finance, that container must be replaced.
As narratives shift, how should companies position themselves in the era of on-chain Wall Street?
Looking back at SUI's "corporatized treasury" strategy: it wasn't a "tech company using a shell company to go public," but rather an existing listed company proactively aligning its assets, brand, and governance with SUI—first receiving funds (private placement), then acquiring tokens (building a position), then changing its name (brand merger), and finally, publicly disclosing "what we hold, how we measure it, and how it impacts net asset value per share." This provides institutional investors with a familiar framework: you're investing in a company whose book assets are represented by a public blockchain token. Consequently, the trust once reliant on foundation "endorsement" has been replaced by audits, annual reports, and board resolutions. This shift from idealism to accounting will be one of the most memorable industry milestones of 2025.
Consider Conflux: Instead of simply merging with other companies, it incorporated "financial collaboration with listed companies" into its governance authorization and implemented "robust constraints that traditional capital can understand," such as long lock-up periods. The value of this step lies not in the headlines but in bringing the four key elements of the ecosystem—the treasury, the listed company, the lock-up period, and the consideration arrangement—to public discussion within governance. Procedurally, you acknowledge that this type of collaboration is a crucial driver of ecosystem development, while simultaneously using long lock-up periods and governance processes to manage the risks of "short-term speculation." This is pragmatic for a domestic public blockchain.
Essentially, these explorations by SUI and Conflux are building fragmented "bridges" between crypto assets and traditional finance. Nasdaq's implementation has truly connected these small bridges into a viable "main artery." The three pillars of "token inclusion in financial statements, equity tokenization, and mainstream trading" have become a replicable industry paradigm. SUI addresses the integration of crypto assets into the real economy, Conflux explores the compliance integration of public chains with real-world entities, and Nasdaq completes the final link: integrating tokenized assets into mainstream trading scenarios. The integration of crypto and traditional finance has evolved from case studies to a well-established, rule-based process. This, in turn, de-emphasizes the irreplaceable nature of the vague endorsement of "offshore foundations," marking the industry's true entry into a phase characterized by "institutional framework + technological advantage." This will significantly enhance the flexibility and confidence of institutional participants.
A friend asked: "How can we say the Ethereum Foundation and the Solana Foundation are still around? The "demise" of the foundations is not about the dissolution of the legal entity, but about the change of protagonists in the industry narrative."
In the Ethereum ecosystem, the truly noticeable growth comes from a number of corporate teams—L2, Rollup, data availability layer, client and development tool companies, KYC compliance service providers, and fintech clearing and settlement services. Growth and employment occur within these companies, not in the foundation's financial reports. The foundation will continue to carry out several "must-do" public welfare projects: basic research, public goods funding, education, and community development. However, it will no longer be a major player in commercialization and the capital markets. This is what I mean by "extinction."
This "role change" has also transformed the relationship between projects and capital. In the foundation era, investments focused on "vision + consensus"; in the corporate era, investments focus on "capability + cash flow." Visions haven't lost their value, but they must be embedded in auditable and accountable structures. For startups, this is actually a positive development: incentives are clearer, financing is smoother, and business negotiations are more manageable. For regulators and banks, it provides a better understanding: knowing whom to contact, whom to review, and whom to penalize. For the secondary market, valuations also have a more stable anchor: with annual reports and net asset value per share, there are "clearly explained fluctuations."
Foundations are the ideal container for a generation of crypto enthusiasts, carrying the early romance of "autonomy" and respect for "open source." But the industry has moved beyond the stage where "ideals alone can advance." What we need now is an "institutional interface" that connects with banks and auditors, a "legal interface" that accommodates treasury and team incentives, and a "governance interface" that allows access to capital markets and withstands the costs of failure. The corporate system provides these interfaces. This is not the "end of ideals," but rather the "ideals finding a more suitable container."
You might be worried, "Does that mean decentralization is over?" I'm not pessimistic. Decentralization is a question of network structure and ownership structure, while corporatization is a question of governance efficiency and external dialogue. The two are not in conflict. On the contrary, when token custody, bookkeeping, disclosure, and risk management are regulated by corporate and securities laws, the network's anti-fragility may be enhanced: bad debts, malicious activities, and profiteering will be easier to identify and punish. International regulatory trends also emphasize this point: clarify who is responsible before discussing how technology can serve financial infrastructure.
For enterprises, by establishing a compliant equity structure, connecting with institutional capital, and improving the governance system, they can build a solid "compliance foundation" for their Web3 layout; while token incentives play the role of "activating the ecosystem and binding consensus", but they are no longer the disorderly issuance model of foundations in the early years. Instead, they are "ecological lubricants" that are deeply bound to corporate businesses and subject to compliance constraints.
Web3 companies' dual-engine drive can achieve a synergistic effect: "1+1>2": Equity financing provides compliance and financial strength, giving token incentives the confidence to implement. Together, these two factors contribute to a mature ecosystem characterized by clear ledgers and a healthy ecosystem. This allows companies to maintain compliance in their Web3 deployments while also capitalizing on the benefits of ecosystem innovation.
Finally, goodbye, Crypto World Foundation.
Hello, two-wheel drive Web3 company.
