Category: Blog

Why They’re Increasing and What an Orderly Wind-Down Looks Like

The Web3 industry is no longer operating under the same conditions that defined the previous cycle. The environment that enabled rapid formation, long runways, and loosely structured foundations has changed materially.

Many of the ideologists, speculators, and short-term participants that shaped earlier market behavior have exited. What remains is a smaller, more pragmatic ecosystem focused on execution, sustainability, and accountability. In this environment, projects that were built for perpetual growth without durable foundations are increasingly confronting hard operational realities.

As a result, the number of foundations and token issuers entering distress or considering formal wind-down is expected to rise significantly.

This is not an anomaly. It is a natural market correction.

Why Foundation Liquidations Are Increasing

A large number of foundations were established during periods of excess optimism, often with assumptions of continued expansion, sustained token demand, and indefinite community engagement. As those assumptions fall away, many entities are discovering that their structures are no longer fit for purpose.

Common drivers of liquidation include:

• Treasury depletion without sustainable inflows
• Loss of developer activity or ecosystem participation
• Governance paralysis or inactive boards
• Token models that no longer support ongoing operations
• Operational overhead that exceeds remaining runway

In these circumstances, continuing operations can create unnecessary risk and cost. An orderly liquidation is often the most responsible outcome for directors and stakeholders.

What Liquidation Actually Involves

Liquidation is a structured governance and operational process, not simply the cessation of activity. For foundations and token issuers, it requires careful coordination across multiple dimensions.

This typically includes:

• Appointment of an experienced independent or interim director that specializes in liquidations to oversee the process
• Review and wind-down of service provider and commercial agreements
• Assessment of current assets and outstanding liabilities
• Treasury reconciliation across fiat and digital assets
• Execution of formal governance actions in line with the foundation’s constitutional documents

Handled poorly, liquidation can expose directors to unnecessary risk and create friction with counterparties. Handled correctly, it provides clarity, closure, and protection for all parties involved.

How Mugen Supports Foundation and Token Issuer Liquidations

Mugen supports foundation and token issuer liquidations in collaboration with Verdant, which can provide independent and interim distress directorship where required.

Mugen’s role is focused on execution and coordination, including:

• Supporting interim distress directors across governance and operational matters
• Managing the orderly wind-down of service provider and commercial agreements
• Coordinating accounting reviews of assets and liabilities
• Assisting with treasury documentation and reconciliation
• Ensuring governance actions are properly documented and defensible

The objective is not speed for its own sake, but a controlled, well-documented process that minimizes risk and avoids unnecessary escalation.

A Necessary Function of a Maturing Market

As the industry evolves, responsible wind-downs are becoming as important as responsible launches. Liquidation is not a failure of decentralization. It is part of building a healthier, more durable ecosystem.

Foundations that address distress early preserve optionality and reduce downstream risk. Those that delay often compound the problem.

Mugen’s liquidation services exist to support projects through this phase with clarity, structure, and accountability when continuation is no longer the right path forward.

For most of Web3’s life, privacy has been treated as optional.

Something you add later. A toggle you flip on if you care enough. A tool you reach for once the core product already works.

That mindset is breaking down.

One of the most important ideas coming out of recent a16z crypto thinking is not that privacy matters. We have known that for years. The real shift is more structural. Privacy is moving from a feature choice to a design constraint. The same category as security, scalability, or correctness.

Builders who continue to treat privacy as a bolt-on will find their systems failing as they grow.

Why bolt-on privacy doesn’t scale

Most privacy solutions in crypto today are retrofits.

Mixers. Optional shielded pools. Privacy modes you can enable if you know what you’re doing.

They work in isolation. They do not work as foundations.

The reason is composability. Modern crypto systems assume shared state. Protocols expect balances to be readable. Wallets expect transaction history to be indexable. Analytics tools expect visibility. Governance systems expect voting power to be observable.

When privacy is external or optional, every integration becomes conditional. Every downstream system has to ask whether the data it is reading is complete, partial, hidden, or obfuscated.

That creates friction everywhere.

You can make a private transfer, but not a private position. You can hide a swap, but not the strategy behind it. You can shield funds, but the moment you interact with the broader ecosystem, everything becomes visible again.

This is why “we’ll add privacy later” almost always fails. Retrofitted privacy does not compose. And systems that do not compose cannot scale.

Privacy has to live at the core

The more useful framing is to treat privacy as an architectural property rather than a feature.

If privacy is going to work at scale, it has to exist at the same layers where security already exists.

At the account layer, privacy determines whether an address is just a public identifier or a protected identity. Public addresses that leak all historical behavior are effectively doxxed identities. Rotating addresses helps only temporarily. Patterns emerge quickly.

At the balance layer, privacy determines whether economic state is globally visible or locally verifiable. Broadcasting balances to the world may sound principled, but it is operationally hostile to anyone managing real capital. Treasuries, funds, DAOs, and individuals do not operate safely when every counterparty can see their exact position.

At the transaction layer, privacy governs intent. Public mempools leak strategy before execution. They invite front running, sandwich attacks, and adversarial behavior. This is not an unavoidable market feature. It is a consequence of forcing intent into the open too early.

When privacy exists at all three layers, systems stop fighting themselves. Composability returns. Privacy is no longer a special case. It becomes the baseline.

The HTTPS analogy is not a metaphor. It’s a warning.

Early internet applications did not default to HTTPS. Encryption was optional. Most sites did not bother.

Then commerce arrived. Payments arrived. Identity arrived.

At that point, transmitting data in plaintext stopped being risky and started being irresponsible. HTTPS went from a nice-to-have to table stakes. Eventually, browsers began actively penalizing sites that did not adopt it.

Web3 privacy is following the same path.

Public blockchains worked when stakes were low and usage was niche. But as real value, automation, and institutions move on-chain, total transparency becomes a liability. Not because people want secrecy, but because systems cannot function safely without confidentiality.

Today, no one asks whether they want HTTPS. It is assumed. Financial privacy is heading in the same direction.

Wallets are where this gets decided

Protocols can innovate on cryptography. Chains can experiment with confidential execution. But users do not live at the protocol layer. They live in wallets.

A wallet that treats privacy as optional pushes complexity onto users. It forces them to make decisions they do not fully understand. It leaks state the moment they click the wrong button.

A privacy-native wallet does the opposite. It enforces constraints automatically.

This is the philosophy behind LexieVault.

Instead of offering privacy as a mode you opt into, Lexie treats privacy as an account-level property. Balances are shielded by default. Transfers are private by default. Disclosure happens only when it is explicitly required.

The user does not manage cryptography. They manage intent.

The system hides complexity while enforcing privacy constraints consistently. That distinction matters. When privacy is native, users do not need to remember to turn it on. They do not accidentally leak state. They do not break composability by stepping outside a protected silo.

Privacy becomes part of how the system behaves, not a temporary condition.

What this means for builders

The uncomfortable truth in the a16z thesis is that many existing designs are already boxed in.

If your system assumes public balances, public intent, and public identity at its core, you cannot patch privacy on later without rewriting fundamental assumptions. That is not a moral judgment. It is a design reality.

The next generation of Web3 infrastructure will be built the way secure internet infrastructure was built. Privacy first. Disclosure second. Verification without exposure.

This is not about evading regulation or accountability. It is about building systems that can support real economic activity without turning every participant into a glass box.

Institutions will not run payroll on transparent ledgers. Funds will not deploy strategies in public mempools. AI agents will not survive if their behavior is instantly visible to adversaries.

Privacy is becoming a prerequisite for functionality.

The inevitable outcome

Privacy is not winning because users suddenly care more about secrecy.

It is winning because transparent systems do not survive contact with reality.

Builders who understand this now will design accordingly. Builders who do not will keep adding tools to patch problems their architecture created in the first place.

The next wave of Web3 applications will not ask users if they want privacy.

They will assume it.

Read more here.

In the ever-shifting landscape of cryptocurrency, few aspects have undergone as dramatic a transformation as the approach to ecosystem growth and collaboration. What began as wide-ranging grants programs has evolved into carefully curated strategic partnerships, reflecting a broader maturation of the entire space.

I remember a time when projects would cast wide nets, funding a multitude of promising ideas through grants. The ethos was one of experimentation and hope. Cast enough seeds, and surely some would grow. While this approach led to bursts of innovation, it often lacked the focus, accountability, and measurable outcomes that a maturing industry increasingly demands.

Fast forward to 2026, and the picture looks markedly different. The crypto winter, combined with sustained regulatory pressure and tighter capital markets, has forged a new mindset among leading projects. Gone are the days of haphazard collaborations and hope-based funding. In their place, we see a more disciplined, ROI-driven approach to partnerships that prioritizes ecosystem value, scalability, and durable network effects.

The Shift from Grants to Partnerships

The transition from grants programs to strategic partnerships represents more than a change in terminology. It is a fundamental reimagining of how projects interact and grow within the ecosystem. This shift is characterized by several key factors:

1. Careful Partner Selection
   Unlike the earlier “spray and pray” approach of grants programs, projects now meticulously vet potential partners. They look for proven execution, complementary capabilities, and alignment on long-term vision. Reputation and signaling risk now matter just as much as technical promise.
2. Focus on Ecosystem Value
   Partnerships are no longer evaluated in isolation. Teams increasingly ask whether a collaboration strengthens the broader ecosystem, unlocking new use cases, improving developer experience, or reinforcing network effects, rather than delivering short-term wins for a single party.
3. Measurable Scalability
   Modern partnerships come with clearly defined success metrics. Whether it is user growth, transaction volume, liquidity depth, or enterprise adoption, collaborations are expected to demonstrate tangible traction rather than theoretical upside.
4. ROI-Driven Approach
   There is a renewed emphasis on return on investment. This is not only in financial terms, but also in strategic leverage. ROI might take the form of market access, distribution, regulatory positioning, or accelerated technical development.
5. High Network Impact
   Successful partnerships leverage the combined reach and credibility of both parties. Co-marketing, co-signaling, and shared narratives have become critical, amplifying impact far beyond what either project could achieve alone.

To put this shift into context, in the grants era, a Layer 1 protocol might fund dozens of early-stage teams with minimal coordination, hoping a few would eventually gain traction. Today, that same protocol might partner with two or three carefully chosen teams, perhaps an infrastructure provider and a high-usage application, aligning incentives, timelines, and success metrics from day one. The result is fewer bets, but significantly higher conviction and follow-through.

The New Face of Crypto Partnerships

Modern crypto partnerships are deeper and more operationally intertwined than their predecessors. Rather than one-off funding arrangements, they increasingly resemble long-term strategic alliances.

These partnerships often include joint go-to-market strategies, shared product roadmaps, coordinated launches, and explicit commitments around integration depth. In many cases, teams align not just on what they are building, but on how and when they will deliver value to users.

Importantly, this new model also raises the stakes. When partnerships are public and tightly coupled, failure is more visible. As a result, teams are incentivized to move slower on deal-making, but faster and more decisively on execution once a partnership is in place.

The Impact on Innovation

At first glance, this more structured approach might seem like a constraint on the freewheeling innovation that defined crypto’s early days. In reality, it is driving a different and more sustainable form of creativity.

Innovation is shifting away from sheer idea generation toward execution excellence. Creativity now shows up in how partnerships are structured, how incentives are aligned, and how distribution is unlocked. Instead of hundreds of loosely connected experiments, ecosystems are built through fewer collaborations with clearer ownership, stronger incentives, and higher expectations.

This evolution reflects a broader truth. As the industry matures, innovation does not disappear. It becomes more disciplined.

Looking Ahead

As we move further into 2026, mastering the art of strategic partnerships will be a defining factor for success in the crypto space. Ecosystems will no longer be built by volume alone, but by leverage, by the ability to form collaborations that compound value across technology, distribution, and trust.

Grants rewarded optimism. Partnerships reward results.

I’ve been in the crypto space long enough to have seen multiple cycles come and go, along with the confident declarations that this time everything would be different. Sometimes it was. Often, it wasn’t.

For years, many of us relied, quietly or loudly, on the idea of a predictable four-year cycle. You positioned early, tolerated volatility, and trusted that time, and perhaps a little optimism, would do the rest.

2025 had other plans.

Instead of resolving neatly into a familiar bull-market structure, the cycle diverged. A sequence of events introduced volatility that felt less like healthy market churn and more like a reminder that assumptions don’t age particularly well. By the end of the year, optimism hadn’t disappeared, but it had become noticeably more selective.

That shift is exactly why treasury management has moved from a back-office function to a board-level conversation.

From Growth Narratives to Capital Reality

Across crypto organizations, budgets are tightening. Not because teams have lost conviction, but because conviction alone doesn’t pay invoices.

Treasuries are being run with:

• Smaller, more intentional allocations
• A clearer preference for seasoned teams over “promising experiments”
• A sharper focus on real, defensible ROI, not just good storytelling

The implicit question has changed from “How much upside can we capture?” to “How long can we operate if markets stay… like this?”

That’s not pessimism. That’s experience.

When TradFi Starts Sounding Reasonable

Perhaps the most telling development is how often traditional finance principles now show up in crypto treasury discussions, sometimes spoken reluctantly, sometimes with a sigh of acceptance.

Risk management. Capital preservation. Benchmarking.

Concepts once dismissed as overly cautious are now back in rotation. This shows up not only in asset allocation, but in how treasuries think about liquidity, duration, and counterparty exposure.

It was also hard to ignore that Bitcoin trailed gold during periods when many expected it to behave as a macro hedge. Interpret that however you like, but treasuries certainly did. The result has been renewed attention to yield, cash management, and, yes, actual Treasuries. Not everything needs to be revolutionary to be effective.

Treasury as a Signal, Not Just a Safeguard

What’s often overlooked is that treasury management isn’t only about internal resilience. It’s also about external confidence.

Matured treasuries understand that how capital is managed sends a signal to their communities. In uncertain markets, stakeholders don’t need dramatic reassurances or reactive changes. They need quiet confidence and evidence that the organization can weather volatility without amplifying fear, uncertainty, or doubt.

In that sense, treasury strategy becomes part of communication strategy. Stability, transparency, and consistency matter. A well-run treasury reassures its community not by saying “everything is fine,” but by demonstrating that it’s prepared even if things aren’t.

Entering 2026: Less Hype, More Intent

The mood going into 2026 isn’t fear. It’s fatigue. Teams are more selective. Capital is more deliberate. Assumptions are being questioned earlier, and with fewer theatrics.

This is, arguably, a good thing.

Crypto doesn’t mature by losing its edge. It matures by learning when not to swing. Treasury management is where that lesson is being applied most clearly, where innovation meets operational reality.

For organizations that approach this thoughtfully, treasury strategy won’t just be defensive. It will be strategic, a source of resilience, credibility, and trust.

And for those of us who’ve lived through a few cycles already, the takeaway remains consistent: markets don’t just reward conviction. They reward preparation, and occasionally, humility.