From protocol upgrades to treasury deployments to entirely new legal structures, on-chain organizations proved they can make complex decisions at scale. Here's a look at what the biggest organizations on Tally accomplished this year.

Arbitrum: Growth & governance evolution

The Arbitrum DAO has established itself as one of the most active governance communities in crypto. The Arbitrum community processed 19 proposals, executed several protocol upgrades, and continued developing its approach to treasury management on Tally.

By the numbers:

• 19 total proposals brought to on-chain vote

• 17 proposals passed (89.5% success rate)

• 2 proposals defeated through democratic process

• Over 5,000 unique voters participated across proposals at peak

• 99%+ approval rates on critical technical upgrades

• 8,500 ETH deployed to productive treasury strategies

Participation remained relatively consistent throughout the year, with thousands of token holders engaging across proposals.

Q1 2025: Laying the foundation

Activating BoLD: A new era of security

January kicked off with the activation of Arbitrum BoLD (Bounded Liquidity Delay). With 99.99% approval from 5,150 voters, the DAO approved this upgrade to Arbitrum's dispute resolution mechanism.

BoLD represents years of research and development, providing deterministic finality guarantees while maintaining decentralization. The high approval rate reflected strong community alignment on the technical improvement.

Building organizational capacity

The DAO recognized great governance requires great infrastructure. Two pivotal organizational proposals passed in late January:

OpCo: A DAO-adjacent Entity for Strategy Execution brought professional execution capacity to the DAO's ambitious plans. While this proposal saw more debate (56% approval), the eventual passage signaled the community's willingness to experiment with new organizational structures.

Stable Treasury Endowment Program 2.0 received strong support (93% approval) with 4,179 voters backing enhanced treasury management practices, setting the stage for the sophisticated treasury operations that would define much of 2025.

Q2 2025: Technical excellence meets financial maturity

Timeboost: Innovating MEV management

March brought the Timeboost + Nova Fee Sweep proposal. Passing with 87% approval, Timeboost introduced an auction mechanism for transaction priority, aiming to capture MEV (Maximal Extractable Value) for the protocol rather than external actors.

Growing the developer ecosystem

Spring saw the DAO invest heavily in its future through:

• Arbitrum Audit Program (79% approval, March): Ensuring security across the growing ecosystem

• ArbOS Version 40 Callisto (92% approval, May): The first major ArbOS upgrade of the year, bringing Ethereum compatibility improvements and performance enhancements

• The Watchdog Grant Misuse Bounty Program (90% approval, May): Demonstrating the DAO's commitment to accountability and proper fund stewardship

Q3 2025: The DeFi renaissance

DRIP: Catalyzing ecosystem growth

June's DeFi Renaissance Incentive Program (DRIP) marked a new phase in Arbitrum's growth strategy. With 5,566 voters (84% approval), the DAO committed to incentivizing DeFi activity on the network.

DRIP was designed with sustainability as a goal; focusing on leveraged looping strategies and yield-bearing collateral to create lasting liquidity rather than short-term farming.

Governance optimization

Summer also brought important governance improvements:

• Constitutional Quorum Threshold Reduction (89% approval, June): Making governance more accessible while maintaining security

• Entropy Advisors Year 2-3 Renewal (73% approval, July): Continuing professional DAO operations support

The DAO also handled routine but important technical matters like registering the Sky (formerly MakerDAO) custom gateway and the $BORING token bridge.

Q4 2025: Treasury mastery and future-proofing

Sophisticated treasury management

October's 8,500 ETH Treasury Allocation proposal reflected the DAO's evolving approach to treasury management. With 99% approval from 2,370 voters, the DAO authorized deploying idle treasury assets into yield-generating strategies including:

• Liquid staking protocols

• Lending markets (Aave, Fluid)

• DEX liquidity provision (Camelot)

The allocation was designed to support DRIP by providing liquidity where users need it, while generating an estimated 204 ETH annually in yield ($891k at proposal time).

Infrastructure hardening

August's constitutional proposal addressed three critical infrastructure items:

1. Removing Nova's cost cap: Aligning economics with reality after EIP-4844 reduced L1 costs

2. Upgrading Executor contracts: Streamlining future protocol upgrades

3. Disabling legacy USDT bridge: Completing the migration to Tether's modern USDT0 standard

With nearly 100% approval (2,714 voters), this bundled proposal demonstrated governance can handle maintenance without overwhelming voters with separate votes.

December 2025: Preparing for tomorrow

As the year closes, the DAO is voting on ArbOS 51 (Dia)—the most ambitious technical upgrade yet. Currently passing with 99.99% approval from 1,789 voters, ArbOS 51 brings:

• Full Fusaka compatibility: Multiple new EIPs including secp256r1 support and BLS12-381 curve operations

• Advanced gas pricing: Multi-dimensional resource tracking laying groundwork for dynamic pricing

• Increased capacity: MaxTxGasLimit of 32M gas enabling fuller block utilization

• Improved gas targets: Raising effective targets up to 100 Mgas/s for better scaling

Scheduled for activation in January 2026, ArbOS 51 represents the culmination of a year spent strengthening foundations while reaching for new heights.

Looking ahead to 2026

As we turn the page to 2026, Arbitrum DAO enters the new year with:

• Battle-tested infrastructure: ArbOS 51, BoLD, and Timeboost providing a robust foundation

• Productive treasury: Generating ongoing yield while supporting ecosystem growth

• Active community: Thousands of engaged voters ready to tackle new challenges

• Clear processes: Proven frameworks for everything from technical upgrades to treasury management

• Growing ecosystem: DRIP and other programs catalyzing sustainable DeFi growth

Uniswap DAO 2025: A Year of legal innovation and protocol evolution

As 2025 draws to a close, Uniswap DAO has navigated a year of significant governance decisions. This year saw the protocol tackle complex legal questions, advance V4 deployment, and continue refining its operational structure.

Through Tally's governance platform, UNI token holders participated in decisions that will shape Uniswap's direction going forward. From establishing a novel legal structure for the Uniswap DAO, to building V4 infrastructure, 2025 brought meaningful progress alongside ongoing challenges.

The DUNI decision: advancing governance legal structures

In August 2025, Uniswap DAO approved the establishment of "DUNI"—a Wyoming Decentralized Unincorporated Nonprofit Association. With 99.99% support from 145 voters, the community moved forward with this novel entity structure.

DUNI provides limited liability protections for governance participants while maintaining on-chain governance primacy. The structure enables Uniswap Governance to enter into contracts, retain service providers, and comply with US regulatory requirements.

The proposal allocated 1,590,691 UNI (approximately $16.5 million at the time of drafting) to prefund legal defense and tax compliance budgets, along with administrative services from Cowrie. While this represents a significant capital allocation, the funds were primarily necessary to clear retroactive tax liabilities and establish a robust legal defense—foundational requirements for the new entity structure rather than discretionary spending.

As one of the first major protocols to adopt this approach, Uniswap is demonstrating how DAOs can achieve legal clarity while preserving decentralization. DUNI was purpose-built for the Uniswap DAO; other DAOs should reference this model closely to determine if this, or a similar entity structure, could serve their long-term needs.

Uniswap V4: Building out the infrastructure

January 2025 saw the launch of Uniswap V4 on Ethereum, introducing a hook-driven architecture that expands what's possible in DEX design. Throughout the year, governance worked to build the infrastructure for V4 deployment across chains.

Establishing the V4 Licensing Framework

In April, the community passed a comprehensive licensing process for Uniswap V4 deployments with 96.63% support from 257 voters. This proposal created the v4-core-license-grants.uniswap.eth subdomain to track BSL license exemptions and granted the Uniswap Foundation a blanket license to deploy V4 on approved chains.

The Business Source License restricts unauthorized commercial use until June 15, 2027, giving Uniswap leverage to negotiate incentive programs with chains during the growth phase.

The proposal also created the v4deployments.uniswap.eth registry to track all official V4 deployments, ensuring transparency and consistency across the multichain ecosystem.

Scaling V4 and Unichain Support

Building on the licensing framework, the DAO approved $340,000 in funding to scale V4 adoption and support Unichain, Uniswap's new Layer 2 solution. After an initial proposal with licensing components was refined based on community feedback, the revised proposal passed in May with 92.69% support from 139 voters.

The funding breaks down as:

• $250,000 for V4 integration on Ethereum Mainnet in Oku, including backend infrastructure, pool analytics, hook discovery, and routing support

• $90,000 for Unichain deployment and ongoing maintenance

This investment funds tooling development for liquidity providers, traders, and hook developers. The GFX Labs Oku interface aims to make V4's complexity more accessible.

The UAC's expanding role

The Uniswap Accountability Committee (UAC) has grown from a cross-chain deployment coordinator into a broader operational body. In April, the community renewed the UAC for Season 4 with 96.76% support from 234 voters, allocating $370,000 to fund operations through December 2025.

The UAC now manages an impressive portfolio of responsibilities:

• Cross-chain deployment coordination

• ENS record management

• Service provider compensation and accounting

• Custody of DAO-approved funds on Ethereum mainnet

• Incentive distribution across multiple EVM chains

• Governance community calls

• Foundation Feedback Group (FFG) management

This renewal increased budgeted hours from 7.5 to 10 hours weekly per member, recognizing the expanded scope and complexity of DAO operations. The staggered election system retains institutional knowledge while allowing fresh perspectives through regular member rotation.

Fiscal Responsibility and budget management

In April, the DAO approved a $280,142 budget rebalancing proposal for the Uniswap Accountability Committee (UAC) with an overwhelming 96.76% support from 222 voters. This rebalancing addressed fluctuations in UNI token price to ensure all approved programs have adequate funding to meet their commitments.

By separating the rebalancing vote from the UAC renewal, the community ensured each decision received focused consideration.

By the numbers:

• Average voter participation: 175+ voters per major proposal

• Highest participation: 257 voters on the V4 Licensing Process

• Consensus strength: Multiple proposals exceeded 95% approval rates

• Total governance decisions: 7 major on-chain proposals in 2025

The high approval rates suggest effective pre-voting consensus building through Snapshot votes and forum discussions, though some might argue it also reflects limited contention or voter concentration.

Looking ahead to 2026

V4 Expansion: With the licensing framework in place and Unichain live, expect aggressive V4 deployment across major EVM chains. The hook ecosystem is poised to explode, bringing novel market structures and use cases to decentralized trading.

DUNI Operations: The new legal structure will enable more sophisticated partnerships, clearer regulatory engagement, and enhanced protection for governance participants. This foundation positions Uniswap to navigate the evolving regulatory landscape with confidence.

Governance Refinement: The UAC and other working groups will continue evolving, potentially expanding to manage new initiatives and partnerships. The Foundation Feedback Group will play a crucial role in coordinating efforts and ensuring accountability.

Treasury Growth: With V4 gaining adoption and potential protocol fees on the horizon, 2026 could be the year Uniswap's treasury becomes a more active participant in ecosystem growth.

Tally's role in Uniswap governance

Tally provided the infrastructure for Uniswap's 2025 governance activity:

• Transparent voting records for all proposals, enabling community members to track how delegated votes were cast

• Proposal documentation, providing context for decision-making

• Cross-chain coordination through integrations with bridging solutions

• Real-time tracking, allowing the community to monitor progress from submission through execution

The platform handled the DUNI proposal execution smoothly, documenting the legal framework and community support for this significant decision.

ENS DAO: A year of security, infrastructure, and community growth

The Ethereum Name Service (ENS) DAO was characterized remarkable governance maturity and strategic focus. Through seven executed proposals representing millions in treasury deployment, ENS has reinforced its position as Ethereum's primary naming infrastructure while addressing critical security challenges, expanding multi-chain capabilities, and nurturing ecosystem growth.

By the numbers:

• 7 proposals executed with 100% passage rate

• 37,597 active delegates participating in governance decisions

• Near-unanimous support: Most proposals passed with 99%+ approval

Security takes center stage

The SEAL Safe Harbor Agreement

Perhaps the most forward-thinking governance decision of 2025 was ENS's adoption of the SEAL (Security Alliance) Whitehat Safe Harbor Agreement in September. This groundbreaking framework establishes clear legal protection for security researchers ("whitehats") who intervene during active exploits.

The agreement creates a structured response mechanism for crisis situations:

• 10% bounty on recovered funds (capped at $250,000)

• 72-hour return window for rescued assets to designated recovery addresses

• Clear legal protections for whitehats acting in good faith during active exploits

• Identity requirements: KYC and OFAC screening for bounty recipients

Setting Primary Names: Leading by Example

In October, ENS set primary names for core DAO addresses, including the DAO wallet, ENS token contract, and Endowment wallet. As the proposal stated: "ENS DAO demonstrates best practices by using its own protocol fully, serving as an example for other DAOs."

Infrastructure evolution

L2 Reverse Registrars

July brought one of the year's most technically significant updates: enabling L2 reverse registrars for Arbitrum, Base, Linea, OP Mainnet, and Scroll. This update acknowledged a fundamental shift in Ethereum's architecture.

The old assumption—that every entity has the same address across all EVM chains—no longer holds with the proliferation of smart contract wallets and L2-native applications. By implementing chain-specific reverse resolvers (formalized in ENSIP-19), ENS adapted to Web3's multi-chain reality while maintaining its core identity infrastructure role.

TLD Expansion: Bridging Web2 and Web3

ENS's acceptance of the .locker TLD transfer to Orange Domains LLC in July demonstrated the DAO's openness to legitimate Web2-to-Web3 bridges. Orange Domains, as an ICANN-accredited registry operator, presented a compelling case for integration:

• DNS verification via _ens.nic.locker TXT record

• Distribution through 50+ ICANN-accredited registrars (GoDaddy, NameCheap, etc.)

• Multi-chain resolution across Bitcoin, Stacks, Solana, and Ethereum

This proposal passed with 99.99% support.

Operational support

The Superfluid Stream Crisis

August tested ENS's operational agility when Superfluid's autowrap system failed, interrupting payment streams to Service Provider Program Season 2 (SPP2) participants. The DAO's response was swift:

• Immediate diagnosis of the USDCx balance depletion issue

• Retroactive coverage: 400,000 USDCx allocated to cover the interruption period

• Stream restoration: Reactivated the ~$4.5M/year stream to the Stream Management Pod

Supporting Critical Infrastructure: eth.limo

When eth.limo faced unexpected legal expenses related to operating their ENS gateway services, the DAO responded with a 109,818 USDC reimbursement in September. This support for "critical public goods infrastructure" reflected ENS's understanding that its ecosystem depends on reliable gateway operators. The decision passed unanimously (100% approval).

Treasury and ecosystem development

Endowment Diversification Strategy

October's endowment permissions update (EP 6.23) showed sophisticated treasury management through karpatkey's diversification strategy, including new DeFi integrations with Morpho lending markets, Balancer v3 pools, additional Curve stable-pair pools, and Spark Protocol markets.

Contract Naming Season Launch

October also brought the innovative "Contract Naming Season" initiative—a six-month program to drive ENS adoption at the protocol and DAO level:

• 75,000 USDC for operational expenses

• 10,000 ENS tokens for integration incentives

The program targets apps, DAOs, protocol contracts, and enablers like wallets and deployment platforms. The 99.3% approval showed strong community support for proactive growth initiatives.

Looking ahead to 2026

ENS is positioned at the intersection of several important trends:

• Security Professionalization: The Safe Harbor Agreement represents security infrastructure that all serious protocols should adopt

• Multi-Chain Identity: L2 reverse registrars are just the beginning as Ethereum continues scaling via L2s

• Mainstream Onboarding: Between ICANN-accredited registrar partnerships and reduced L2 friction, ENS is building pathways for non-crypto-native users

• Protocol-Level Adoption: Contract naming could become as standard as verified contracts on Etherscan

ZKsync: Building governance infrastructure and launching ZKnomics

As we close the chapter on 2025, ZKsync's governance journey on Tally has shown steady progress. From launching new tokenomics initiatives to refining governance processes, the ZKsync community worked through a busy year of proposals and decisions.

By the numbers:

In 2025, ZKsync processed 19 governance proposals across three proposal types: ZKsync Improvement Proposals (ZIPs) for protocol upgrades, Token Program Proposals (TPPs) for treasury allocation, and Governance Advisory Proposals (GAPs) for process improvements.

• 19 governance proposals processed

• 18 proposals passed, 1 defeated in early stages

• 1,400-2,600 voters per proposal

• Most proposals achieved 99%+ approval rates

The ZK Gateway activation vote (ZIP-10) in May saw 2,670 voters, while the V28 Precompile Upgrade (ZIP-11) engaged 2,652 participants.

ZKnomics: Introducing new tokenomics

Token Staking Arrives (TPP-12)

In October, the community approved TPP-12: ZKnomics Token Staking, allocating 37.5 million ZK tokens (~$1.9M USD) to pilot a six-month token staking program. This proposal introduced Tally's audited Staker contract system to ZKsync, enabling token holders to stake their ZK tokens while maintaining voting power through delegation.

The program ties rewards to governance participation—reward eligibility requires delegating to Delegates who have voted on at least 2 of the last 5 proposals. With a target of growing active voting power from ~1B to ~2B ZK tokens, the program offers up to 10% annualized returns.

Token Burn Mechanism Activated (ZIP-14)

November brought ZIP-14: Upgrade ZK Token with Permissionless Burn Function. Passing with 99.99% approval from 1,247 voters, this upgrade established a supply-side mechanism for potential usage-driven revenue distribution.

Protocol upgrades

ZK Gateway Goes Live (ZIP-10)

May's ZIP-10: Activate ZK Gateway as a Settlement Layer moved ZKsync toward its Elastic Chain vision. With 99.83% approval from 2,670 voters, the community activated ZK Gateway as a settlement layer, enabling interoperability across ZK Chains.

Interoperability Enhanced (ZIP-12 & ZIP-13)

September brought two critical upgrades:

• ZIP-12: V29 Interop Messaging Upgrade (99.98% approval, 1,606 voters)

• ZIP-13: Adding a ZKsync OS CTM (99.97% approval, 1,604 voters)

Together, these upgrades build technical infrastructure for ZKsync's multi-chain roadmap.

Infrastructure funding

Governance System Funding (TPP-11)

TPP-11 allocated 33 million ZK tokens (~$1.65M USD) to maintain and evolve governance infrastructure through December 2026. With 88% approval from 1,470 voters, this proposal ensures continued operation of the smart contracts, interfaces, and processes that enable protocol upgrades, token distribution, and ecosystem coordination.

Security Council and Guardians

The community demonstrated strong support for security with TPP-5: ZKsync Security Council Bridge Funding (98.6% approval) and TPP-6: ZKsync Security Council v2 Funding (99.78% approval), along with TPP-7: ZKsync Guardians Funding 2024-2026 (99.86% approval).

Looking ahead to 2026

As we enter 2026, ZKsync will build on 2025's foundation:

• Mature governance processes with streamlined voting timelines

• ZKnomics infrastructure with staking and burn mechanisms ready to evolve

• Enhanced interoperability and settlement layer functionality

• Consistent voter participation and high approval rates indicating alignment

• Long-term funding secured through 2026

Key areas to watch include decentralized sequencing, fee switch activation, ZKnomics evolution, and Elastic Chain growth.

Compound: Infrastructure and risk management

Compound DAO showed a clear strategic focus: strengthening governance infrastructure, optimizing protocol risk parameters, and enhancing security measures. While the year saw only eight governance proposals, each carried significant weight in shaping the protocol's future.

By the numbers:

• 8 total proposals submitted to governance

• 7 proposals executed successfully (87.5% execution rate)

• 1 proposal canceled (a duplicate governance upgrade submission)

• 100% approval rate for proposals that went to vote

• Active period: January 6 - January 28, 2025

Major initiatives

Governance Infrastructure Modernization

Perhaps the most significant development of 2025 was Compound's comprehensive governance upgrade, which modernized the DAO's core governance contracts. This upgrade marked a pivotal shift from the legacy Governor Bravo contracts to OpenZeppelin's latest governor framework with custom modifications.

The Compound Governor Contracts Upgrade proposal, which passed with 100% support, introduced several crucial improvements:

• Flexible Voting: Integration of ScopeLift's Flexible Voting extension, enabling novel voting schemes

• Updatable Parameters: Previously fixed governance parameters became adjustable through governance

• Extended Quorum Protection: Automatic quorum extension when reached late in the voting cycle

• No Operational Limits: Removal of restrictions on the number of operations per proposal

• Future-Proof Upgradeability: Use of upgradeable proxy patterns for all new contracts

Risk Management Through Active Parameter Optimization

A defining characteristic of 2025 governance was the partnership with Gauntlet, which submitted four detailed proposals focusing on protocol parameter optimization including interest rate curve updates, supply cap adjustments, and COMP reward optimization across Ethereum, Arbitrum, Base, Polygon, Optimism, and Scroll.

Enhanced Security Measures

In January 2025, Compound activated Safe Harbor, a legal framework developed by the Security Alliance (SEAL) that empowers whitehat security researchers to rescue protocol funds during active attacks.

The Safe Harbor proposal established:

• A structured process for whitehat researchers to recover funds

• A clear reward structure: whitehats receive 10% of funds saved, capped at $600,000

• Legal protections for researchers acting in good faith

Protocol expansion

The Update USDC, USDT and USDS Comets proposal expanded Compound's capacity by upgrading three major Comets to support up to 24 collateral assets. The proposal passed with 86.2% approval.

Looking ahead to 2026

Governance activity in 2025 laid important groundwork for Compound's future:

• Modernized Infrastructure: Upgraded governance contracts provide flexibility for future innovations

• Proven Risk Management: The successful partnership with Gauntlet established a template for ongoing protocol optimization

• Enhanced Security Posture: Safe Harbor activation adds a critical safety net for protocol assets

• Expanded Capacity: Comet upgrades positioned Compound to handle growing user demand

Wormhole: Launching on-chain governance

2025 marked an important milestone for Wormhole as the cross-chain messaging protocol launched its decentralized governance system. After building infrastructure connecting over 30 blockchains, Wormhole moved toward community ownership by enabling $W token holders to participate in protocol governance through Tally.

What began in April 2025 with launch validation tests evolved into an active governance ecosystem by year's end, with three foundational proposals establishing rules, processes, and programs for the protocol's governance.

Establishing governance rules

WIP-1: Code of Conduct

On May 23, 2025, Wormhole governance held its first official vote on WIP-1, the Code of Conduct for Wormhole Governance. With 3,428 voters participating and 99.74% voting in favor, WIP-1 achieved 433.4 million W tokens in support.

WIP-2: Governance Process

Simultaneously, WIP-2 introduced the Wormhole Governance Proposal Process, creating a structured pathway from idea to implementation with clear stages: Idea Development, Draft Proposal Submission, Community Comment Period, Temperature Check, Final Proposal Submission, Voting Phase, and Implementation.

With 3,440 voters and 99.73% approval, WIP-2 secured 431.1 million W tokens in support—exceeding the quorum by over 80 million tokens.

The Grants program

WIP-3: Establishment of a Grants Program

On June 14, 2025, Wormhole governance approved WIP-3, creating a $250,000 USD grants program to fund initiatives supporting the Wormhole ecosystem. With 1,894 voters and 99.88% approval, WIP-3 secured 386.4 million W tokens in favor.

By the numbers

• Total Governance Proposals: 3 major proposals (WIP-1, WIP-2, WIP-3)

• Success Rate: 100% of substantive proposals passed and executed

• Average Support: 99.78% approval across all three proposals

• Total Unique Voters: Over 3,400 unique participants

• Peak Participation: 3,440 voters on WIP-2 (Governance Process)

• Highest Vote Count: 433.4M W tokens on WIP-1 (Code of Conduct)

Tally and MultiGov

Wormhole needed governance infrastructure that matched its multichain architecture. Tally, powered by Wormhole's MultiGov technology, enabled cross-chain voting through Wormhole's message-passing infrastructure. Token holders can delegate and vote from any supported chain, with votes aggregated on-chain.

Looking forward to 2026

Wormhole's 2025 governance journey established foundational systems. Priorities for 2026 include:

• Grants Program Execution: First grant-funded projects with monthly reporting

• Governance Refinement: Parameter adjustments based on practical learnings

• On-Chain Treasury: Future proposals may introduce more decentralized fund management

Obol: Building the foundation for decentralized staking

The Obol Collective proved how effective on-chain governance can drive real progress in the distributed validator technology space. From launching their governance token ($OBOL) to implementing sophisticated delegation mechanisms, Obol's community worked through nine substantial proposals that shaped the protocol's trajectory this year.

By the numbers:

• 9 governance proposals voted on

• 6 successfully passed, 3 defeated through democratic process

• 67% success rate reflecting healthy community deliberation

• Over 10 trillion voting power tokens participating in the most contentious votes

Q1: Token unlocking and staking infrastructure

OIP#1: Building and Enabling Staking for the OBOL Token (March 6) launched the protocol's staking mechanism, allowing token holders to stake their OBOL and participate in governance while earning rewards.

OIP#2: Unlock OBOL Token (March 7) made the token transferable, enabling the broader ecosystem participation that governance requires. Both proposals passed with overwhelming support.

Q2: Defining the governance framework

OIP#3: Obol Collective 2025 Goals (April 16) established clear objectives for the year using the SQUAD framework, focusing on accelerating distributed validator adoption, expanding operator participation, and enhancing decentralized decision-making.

OIP#4: Delegate Compensation and Delegate Reputation Score Integration (May 22) introduced a dual mechanism: compensating active delegates for their governance work while implementing a Delegate Reputation Score (DRS) to measure and reward meaningful participation. With a 63% approval rate, the community endorsed a system where rewards flow to those who actively contribute.

The proposal allocated 165,000 OBOL tokens over six months to delegates based on their voting participation, impact, timeliness, and forum engagement.

Summer: Testing governance boundaries

Not every proposal succeeded, demonstrating governance isn't a rubber stamp:

• "Redistribute Unclaimed Airdrop to $OBOL Stakers" was decisively rejected with 83.6% voting against

• "Shutdown of the Obol Association" was overwhelmingly rejected with 86.4% voting against

• Airdrop claim period extension failed with 91.8% against

OIP#6: Assigning the Cancel Role to the Obol Association (July 4) addressed governance hygiene by creating a small 2-of-3 multisig committee with authority to cancel procedurally invalid proposals. The 94.5% approval demonstrated governance maturity.

Fall: Looking to sustainable economics

OIP#7: Staking Rewards Extension & Transition Toward Programmatic Revenue Sharing (November 6) passed with near-unanimous support (99.99%). This proposal extended staking rewards for two more months while laying groundwork for a more sustainable model where staking yields derive from actual protocol revenue rather than pre-allocated rewards pools.

Looking ahead to 2026

As Obol enters 2026, key challenges include designing fair revenue-sharing mechanisms, refining the Delegate Reputation Score system, and scaling governance participation as the protocol matures.

This article is written with data sourced from Tally. All proposal statistics, voting records, and governance metrics are publicly available on each organization's Tally homepage or through the Tally API.

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This comprehensive analysis traces vesting from its pension-era origins through modern corporate equity standards to today's crypto token mechanisms, with documented case studies demonstrating what works, what fails, and what's emerging.

Pension plans invented vesting to solve the worker retention crisis

The American Express Company established the first corporate pension plan in 1875, requiring employees to reach age 60 with 20+ years of service to receive benefits. This was an implicit form of vesting that tied compensation to extended tenure. By the 1920s, over 300 corporate pension plans covered approximately 15% of the U.S. workforce, but most required 25-30 years of continuous service before any benefits became non-forfeitable.

This created a severe retention mechanism with a dark side: workers who departed early, voluntarily or not, lost everything. The 1963 Studebaker-Packard plant closure demonstrated the catastrophic consequences when 8,500-10,000 workers lost pension benefits because the plan was underfunded and poorly vested. This crisis, dramatized in NBC's 1972 exposé "Pensions: The Broken Promise," catalyzed legislative action.

ERISA (Employee Retirement Income Security Act) passed on Labor Day 1974, establishing the first federal vesting standards. Originally requiring full vesting after 10 years (or graduated vesting over 15), subsequent amendments reduced this to 5-7 years, fundamentally redefining vesting from employer-controlled retention trap to employee-protective benefit structure.

Stock option vesting emerged from tax arbitrage in 1950

Equity vesting developed along a parallel track driven not by retention but by tax optimization. The Revenue Act of 1950 created "restricted stock options" under Section 130A of the Internal Revenue Code, allowing gains to be taxed at the 25% capital gains rate rather than the 91% top ordinary income rate. This single legislative change transformed executive compensation.

Before 1950, virtually no executives received stock options. By 1951, 18% had them. By the 1960s, stock options appeared in over 50% of executive compensation packages, with grant values representing 15-30% of total pay. The Tax Reform Act of 1969 created IRC Section 83, establishing the modern framework for taxation of "property transferred in connection with services." This is the legal foundation underlying all equity vesting today.

Silicon Valley pioneered extending stock options to rank-and-file employees, not just executives. When the "Traitorous Eight" engineers founded Fairchild Semiconductor in 1957, they wanted to share equity broadly but were blocked by their parent company. This frustration seeded the culture that would produce the 4-year vesting with 1-year cliff standard by the 1990s, as venture capitalists and startup lawyers standardized terms to accelerate deal velocity.

The rationale: one-year cliffs protect companies from bad hires who typically reveal themselves within months, while four-year total vesting aligns with typical startup-to-exit timelines and creates meaningful retention incentives without feeling like lifetime imprisonment.

Modern corporate vesting has stabilized around predictable structures

Today's corporate equity compensation follows well-established patterns with meaningful variations between companies. The 4-year vesting with 1-year cliff remains standard for startups and most tech companies, but major employers have developed distinctive approaches:

• Google uses front-loaded vesting (33%/33%/22%/12% over four years), keeping employees engaged early

• Amazon back-loads dramatically (5%/15%/40%/40%), offsetting slow early vesting with substantial cash signing bonuses

• Microsoft maintains even quarterly vesting (25% annually)

• Meta begins quarterly vesting after the second vesting date with no cliff period

Double-trigger acceleration has become the industry standard, appearing in 86% of corporate equity plans (up from 70% in 2016). This structure requires both a change of control event and subsequent involuntary termination before unvested equity accelerates, protecting employees from post-acquisition termination while maintaining retention incentives that make acquisitions more attractive to buyers.

The regulatory framework governing corporate vesting centers on IRC Section 83, which taxes property transferred for services when it's no longer subject to "substantial risk of forfeiture" (i.e., at vesting). The Section 83(b) election allows recipients to recognize income at grant date rather than vesting. This is critical for founders receiving restricted stock at pennies per share. This election must be filed within 30 days of property transfer with no exceptions, making it one of the most consequential deadlines in startup compensation.

Recent trends show equity packages declining 36.9% from November 2022 to January 2024, with option exercise rates falling from 58% (November 2021) to approximately 32% (2024). The industry is experiencing a fundamental shift from "growth at all costs" to efficiency-focused compensation philosophies, with equity representing "a smaller piece of the compensation puzzle."

Crypto token vesting emerged from ICO chaos

The 2017-2018 ICO boom revealed what happens without vesting constraints: founders sold tokens immediately post-launch, investors dumped allocations at listing, and retail participants absorbed the losses. The SAFT (Simple Agreement for Future Tokens) framework, adapted from Y Combinator's SAFE structure, introduced investor lockups to the token world. This was something unnecessary in traditional equity where private shares are inherently illiquid.

This represents crypto's fundamental vesting innovation: because tokens can be immediately liquid upon generation, every stakeholder class requires explicit lockup mechanisms that equity never needed. Seed investors receiving 30-70% discounts on token prices now typically face 12-24 month cliffs followed by 24-36 months of linear vesting, while team allocations mirror traditional equity with 4-year vesting and 1-year cliffs.

Industry benchmarks show consistent patterns across successful projects:

Uniswap's September 2020 launch illustrates standard practice: 21.27% to team with 4-year vesting, 18.04% to investors with 4-year vesting, and 60% to community. However, controversy emerged when analysts revealed team tokens weren't locked in smart contracts but held in regular Ethereum addresses. This demonstrated that announced vesting schedules without on-chain enforcement create trust deficits.

Smart contracts transformed vesting from legal promise to code

On-chain vesting enforcement represents crypto's most significant contribution to compensation design. OpenZeppelin's VestingWallet contract provides the industry-standard implementation: tokens lock in smart contracts and release automatically based on programmed schedules, eliminating counterparty risk and manual distribution overhead.

Sablier Protocol, operating since 2019 across Ethereum, Optimism, Arbitrum, Polygon, and Solana, processes vesting through NFT-represented streams that enable linear, exponential, or step-based distribution curves. Users include Uniswap Governance, ShapeShift, and Nouns DAO, with the protocol 90% cheaper than deploying custom vesting contracts. The March 2024 seed round of $4.5M signals institutional confidence in vesting infrastructure.

The technical implementation follows straightforward logic:

• If current time < cliff time: Vested = 0

• If current time ≥ start + duration: Vested = total allocation

• Otherwise: Vested = total × (current time - start time) / duration

Linear vesting dominates (most common), but sophisticated projects employ cliff + exponential curves for team retention or step-based unlocks tied to milestone achievements. The choice between on-chain versus off-chain enforcement involves tradeoffs: on-chain provides transparency and trustless execution but limited flexibility for complex conditions; off-chain enables sophisticated legal terms but requires counterparty trust.

Hybrid approaches are emerging through providers like Toku, connecting on-chain vesting events with payroll systems and tax reporting. This solves the operational complexity that pure on-chain solutions ignore.

Airdrop vesting evolved from immediate dumps to sophisticated distribution

Early airdrops distributed tokens immediately upon claim, creating predictable sell pressure. Uniswap's $6.43 billion airdrop and Arbitrum's $1.97 billion community distribution followed this model, but projects learned that immediate liquidity for recipients meant immediate selling.

Multi-round seasonal airdrops emerged as the primary innovation. Blur distributed across three seasons, Optimism executed four-plus drops, and these structures create sustained engagement rather than one-time wealth transfers. Arbitrum implemented differentiated treatment: community tokens claimed immediately, while investor and team allocations faced 4-year lockups with 1-year cliffs and monthly unlocks thereafter.

dYdX's approach represented the longest airdrop vesting, distributing $2 billion worth of tokens over a 5-year vesting span with incremental releases. This made immediate liquidation impossible and aligned recipients with long-term protocol success.

Anti-sybil mechanisms have become essential components of airdrop design:

• Transaction timing analysis penalizing suspicious activity windows

• Minimum balance requirements

• Cross-platform activity verification

• Community-sourced sybil hunting programs (Arbitrum collaborated with Nansen)

Liquidity provider vesting solved the mercenary capital crisis

DeFi 1.0's liquidity mining created unsustainable dynamics: protocols emitted governance tokens to attract deposits, "liquidity locusts" farmed rewards and migrated to higher-yield protocols, and continuous emissions diluted token value. The Big Data Protocol gained approximately 10% of total DeFi TVL in one weekend, then collapsed when farmers departed.

Protocol-owned liquidity emerged as the primary solution. Olympus DAO pioneered bonding mechanisms where users exchange LP tokens for discounted OHM with 5-10 day vesting periods. This resulted in protocols owning 99%+ of their own liquidity rather than renting it through emissions.

veTokenomics (vote-escrow tokenomics), implemented by Curve and adopted across DeFi, requires locking governance tokens for 1-4 years to receive boosted rewards and voting power. The lock multipliers create genuine long-term alignment: 4-year locks receive maximum benefits, while short-term participants receive minimal influence.

Time-weighted LP incentives add complexity: newly earned tokens become claimable over days or weeks rather than immediately. Radiant Network requires 5% liquidity provision for reward eligibility, preventing pure farming without protocol commitment.

Regulatory frameworks are crystallizing around token vesting design

The Howey Test (SEC v. W.J. Howey Co., 1946) governs whether tokens constitute securities: an investment of money in a common enterprise with expectation of profits derived from others' efforts. Token vesting design directly implicates this analysis. Lockups indicate investment intent, discounts suggest profit expectations, and team development efforts satisfy the "efforts of others" prong.

Key enforcement actions have shaped industry practice:

SEC v. Ripple Labs (2020-2025): Institutional sales deemed securities; programmatic retail sales ruled not securities. The 2025 settlement ($50 million penalty, reduced from $125 million) established transaction-by-transaction analysis rather than blanket token classification.

SEC v. Telegram (2019-2020): $1.7 billion raised via SAFTs for GRAM tokens halted because discounted pre-functional token sales to investors constituted securities distribution. Project abandoned, investors refunded.

SEC v. Terraform Labs (2023): Judge Rakoff rejected distinctions between institutional and retail sales, deeming LUNA, UST, and MIR all securities. Anchor Protocol's 20% yield cited as evidence of profit expectations.

The implication: vesting schedules can indicate investment intent to regulators. However, the Ripple ruling suggests airdrops and free distributions may avoid the "investment of money" prong entirely, creating distinct regulatory treatment for purchased versus distributed tokens.

Swiss FINMA classifies tokens as payment, utility, asset, or hybrid, with only asset tokens subject to securities regulation. Singapore MAS under the Payment Services Act regulates Digital Payment Token service providers with increasing consumer protection requirements, including September 2024 restrictions on crypto marketing. Cayman Islands and BVI remain popular for structural flexibility with their foundation company structures supporting DAO governance, though both maintain FATF-compliant AML/CFT requirements.

Case studies reveal what succeeds and what fails

Successful alignment

1. Google's RSU program created thousands of millionaires among early employees, with front-loaded vesting keeping engagement high during hypergrowth. During the 2009 financial crisis, Google offered an option exchange program that added 12 months to vesting periods while lowering strike prices. This demonstrated that flexible modification during crises maintains alignment while adapting to market conditions.

2. Compound's token design allocated 2.23 million COMP to founders/team with 4-year vesting, but zero tokens remained with Compound Labs Inc. This was deliberate liability protection while maintaining alignment through individual grants. This separation between corporate entity and token holdings has become a best practice.

Vesting preventing problematic exits

1. Solana's FTX bankruptcy exposure demonstrated vesting's protective function. FTX held approximately $685 million in locked SOL tokens. When 11.2 million SOL ($2.03 billion) unlocked in March 2025, the vesting schedule had given the market years to absorb news and prepared buyers to step in. Galaxy Digital purchased 25.5 million locked SOL at $64/token during bankruptcy proceedings, accepting vesting risk for substantial discount.

Catastrophic failures

1. FTX's FTT token vesting exemplifies manipulation: 57.3% of 350 million FTT sat in a 3-year vesting contract with Alameda-controlled wallets as sole beneficiary. FTX and Alameda controlled approximately 90% of FTT supply, using vesting to create artificial scarcity and prop up balance sheets. The November 2022 collapse revealed 192 million FTT unexpectedly unlocked from deployer contracts. Vesting became a fraud tool rather than an alignment mechanism.

2. Twitter/X acquisition (October 2022) demonstrated how vesting protections can be circumvented. Musk closed the acquisition on October 28; employee RSUs were scheduled to vest November 1. Layoffs began November 4. Top executives were terminated "for cause" to avoid $76.6 million in combined golden parachute payments. A $500 million class action lawsuit claims workers received a "fraction" of promised severance.

Notable innovations

1. MakerDAO allows contributors to retain MKR vesting rights after leaving, challenging the assumption that vesting must stop upon termination. This "continue after leaving" provision ensures smooth transitions and reduces the toxicity of golden handcuffs.

2. Terra's 2019 investor vesting modification changed from cliff unlocks (20 million tokens at once) to linear vesting (approximately 20,000 tokens at a time) spread over 17 months, drastically reducing price uncertainty from unlock events. Vesting schedules can be modified mid-stream with stakeholder cooperation.

Best practices for modern vesting design

For corporate equity

• Implement double-trigger acceleration (86% industry adoption) balancing employee protection with acquirer interests

• Front-load vesting (Google model) for engagement or back-load (Amazon model) offset by cash signing bonuses

• Ensure Section 83(b) elections are filed within 30 days for restricted stock grants

• Monitor the $10 million Rule 701 threshold requiring enhanced disclosure for equity compensation

For crypto tokens

• Enforce vesting on-chain through smart contracts. Announced schedules without code enforcement create trust deficits

• Apply identical lockup periods to all insiders (team, investors, advisors) following a16z crypto guidance of minimum 1 year, preferably 3-4 years

• Use 90-day moving averages for grant pricing to combat volatility

• Plan for departure scenarios with clear forfeiture rules documented before issues arise

• Consider linear vesting over cliff unlocks to reduce market volatility at unlock dates

Common pitfalls to avoid

• Vesting beneficiaries different from stated parties (FTX model)

• Excessive concentration allowing governance manipulation

• Tokens held in regular wallets despite vesting claims (Uniswap controversy)

• Underwater options creating "faux golden handcuffs" with no retention value

• Terminating employees just before cliff dates (documented industry practice)

Emerging trends

• Milestone-based vesting tied to protocol achievements rather than time alone

• Hybrid on-chain/off-chain systems connecting smart contract distribution with payroll and tax reporting

• Protocol-owned liquidity replacing traditional LP mining to eliminate mercenary capital

• Multi-round airdrops enabling adaptive distribution strategies based on user behavior

• veTokenomics requiring long-term token locks for governance participation

The convergence ahead

Crypto vesting has compressed fifty years of corporate compensation evolution into less than a decade, moving from no restrictions (2017 ICOs) through basic lockups (SAFT era) to sophisticated smart contract enforcement with regulatory awareness. The fundamental insight from both traditions remains constant: sustainable value creation requires sustained commitment, and vesting mechanisms must make that commitment credible.

For crypto industry professionals, the key differentiator from traditional equity is immediate liquidity potential. Every stakeholder class needs explicit constraints that private equity never required. The projects succeeding implement transparent on-chain vesting with reasonable timelines (4 years for teams, 2-3 years for investors), clear regulatory positioning, and honest acknowledgment when vesting creates problems rather than solutions.

The next frontier lies in integrating traditional compensation infrastructure (payroll, tax reporting, benefits administration) with on-chain execution. This solves operational complexity while preserving crypto's transparency advantages. Projects like Toku represent early movement toward this synthesis, but significant integration work remains before token compensation achieves the operational maturity of traditional equity programs.

Go public without gatekeepers. Token sales are the future of fundraising — faster, cheaper, and more globally accessible than IPOs and venture rounds. Tally gives you the infrastructure to launch your token, raise capital, and scale, with enforced vesting and unlocks that align teams, investors, and communities over time — one platform for the full token lifecycle.

Join the founders using Tally to launch tokens, raise capital, and scale globally. Book a free consultation.

If you've been watching the token launch landscape, you've noticed the shift. After years of airdrops, private SAFTs, and convoluted points programs, public token sales are making a serious comeback, and it’s nothing like 2017.

MegaETH raised $50M in minutes with 27x oversubscription. Plasma pulled in $500M when they'd planned for $50M. Monad brought ICOs back to U.S. retail with Coinbase's new token launch platform, drawing 85,000 participants. Uniswap has launched a new Continuous Clearing Auction model powering Aztec’s ICO. This isn’t an anomaly, it’s a signal.

ICO infrastructure has matured. The regulatory picture is clearer. And perhaps most importantly, the market is hungry for legitimate ways to participate in protocol upside beyond hoping for an airdrop.

Why now?

Three things have converged:

Regulatory thaw: We're not in 2018 anymore. Coinbase acquired Echo/Sonar for $375M and launched a regulated token sale platform and Brian Armstrong is publicly announcing U.S. retail can participate in compliant token sales for the first time since the SEC crackdowns. MiCA provides a framework for Europe and the CLARITY Act working its way through Congress could finally give U.S. projects a clear path forward. The legal landscape isn't perfect, but it's workable.

Airdrop fatigue: Let's be honest, airdrops have become a mess. Sybil attacks, mercenary farmers, communities that evaporate after the claim. Projects are realizing that people who pay for tokens often care more than people who game criteria for free ones. The shift away from airdrops toward structured token sales reflects a hard-won lesson.

Distribution matters: After watching governance concentrate in VC and insider hands, there's renewed appetite for broad, fair token distribution. A well-run ICO can put tokens in thousands of wallets from day one, creating a genuine stakeholder base rather than a cap table masquerading as a community.

What's different this time

The 2017 playbook was simple: deploy a contract, take ETH, hope for the best. The 2025 playbook is far more sophisticated:

Fair allocation mechanisms: MegaETH weighted allocations by on-chain activity and ecosystem alignment. Coinbase's platform prioritizes smaller bids over whales. Projects are actively designing against the "VCs eat first" dynamic that poisoned previous cycles.

Anti-flipper measures: Coinbase will penalize wallets that dump immediately by restricting future sale access. MegaETH offered U.S. buyers a 10% discount for accepting a 1-year lockup. The goal is filtering for believers, not speculators.

Team alignment: Founders are taking smaller allocations (MegaETH's team kept just 9.5%) and accepting meaningful lockups. Teams are recognizing that community trust is worth more than extra tokens.

Compliance by design: KYC/KYI is standard. Geo-restrictions are handled programmatically. Vesting schedules are enforced on-chain. The "move fast and break things" approach has been replaced by "move deliberately and stay out of court."

The honest trade-offs

It’s not all upside.

Oversubscription is a double-edged sword: “27x oversubscribed” sounds great until you realize most of your community got tiny allocations or nothing at all. MegaETH's token traded at 4x ICO price before distribution; great for winners, frustrating for everyone else. Managing community expectations around scarcity is genuinely hard.

Regulatory risk hasn't disappeared: It's lower, but it's not zero. Most projects still exclude the U.S. or specific states. Even Coinbase's platform couldn't take New York residents. Until legislation like the CLARITY Act passes (or doesn't), there's residual uncertainty. As a16z's Miles Jennings has noted, public sales in the US remain risky without clear regulatory frameworks.

Execution is non-trivial: MegaETH had a "multisig chaos" issue that required refunding deposits. Handling thousands of participants in real-time, across jurisdictions, with compliant KYC, is operationally complex. This isn't something to DIY.

Market timing still matters. Monad launched as BTC cooled from $110k to $92k. The sale was 1.4x oversubscribed, respectable, but not the frenzy MegaETH saw. You can't fully control external conditions.

When an ICO makes sense

Not every project needs a token sale. But it's worth serious consideration if:

• Your protocol has genuine token utility: Governance, staking, fee sharing, access rights; the token should do something meaningful in your system, not just exist for speculation.

• You want broad distribution from day one: If concentrated ownership is a governance risk for your protocol, a public sale can establish a decentralized holder base that airdrops often fail to create. Plasma's sale included over 1,100 wallets with a median contribution of ~$35k. 

• You're ready for community accountability: Token holders are vocal stakeholders. They'll be in your Discord, questioning your roadmap, reacting to every delay. If you're not ready for that level of transparency, wait.

• Traditional fundraising doesn't fit your model: If VCs want terms that conflict with your decentralization goals, or if you want capital without giving up equity, an ICO offers a different path.

• You have the operational capacity to execute: This is more than just smart contracts, it's legal structuring, KYC integration, community comms, exchange coordination, and post-sale governance setup.

The full stack problem

Here's what teams often underestimate: a token sale is just the beginning. You also need:

• Token design that aligns with your protocol's economics.

• Compliance infrastructure for KYC/KYI and jurisdiction management.

• Sale mechanics that match your goals (fixed price, auction, LBP).

• Vesting and lockup enforcement that's transparent and on-chain.

• Governance infrastructure so token holders can actually participate.

• Treasury management for the funds you raise.

• Staking and rewards if that's part of your model.

• Ongoing operations as your protocol evolves.

Most teams cobble this together from multiple vendors, custom contracts, and hope. That's how things break.

Where Tally fits

Tally has been building this infrastructure for years, not for ICOs specifically, but for the full lifecycle of token-governed protocols. We power governance for over $1B in assets, including Arbitrum, zkSync, and Wormhole. We've handled token distribution, staking, vesting, and treasury operations at scale.

The ICO resurgence isn't changing what we do, it's expanding when we get involved. Instead of coming in post-TGE to help with governance, we're now helping teams from token design through launch and beyond.

What that looks like:

• Token sale execution across fixed-price, auction, and custom mechanisms.

• Compliance tooling with KYC/KYI and eligibility gating built in.

• Vesting schedules with on-chain enforcement and transparency.

• Governance setup so your token holders have real power from day one.

• Treasury infrastructure for managing what you raise.

• Staking and rewards if that's part of your tokenomics.

• Ongoing support as your protocol matures.

Think of it as the institutional-grade stack for teams that want to launch tokens responsibly, without the operational chaos of stitching together point solutions.

The bottom line

ICOs are back, and they work now. The projects winning today are the ones treating token launches as the beginning of a long-term relationship with their community, not a liquidity event.

The infrastructure exists to do this right. The regulatory environment, while imperfect, is workable. The market appetite is clearly present.

The question isn't whether token sales are viable again, it's whether your team is ready to execute one properly.

If you're exploring a token launch and want to talk through what that looks like with a team that's done this at scale, reach out. No pitch deck required, just a conversation about what you're building and whether a public sale makes sense for your protocol.

Tally provides token infrastructure for leading protocols including Arbitrum, zkSync, Wormhole, and others. We help teams launch, govern, and operate token-based systems at institutional scale.

Learn more & book a consultation.

From launch hype to lasting trust

For much of crypto's history, token launches were measured by spectacle. Success meant getting a token live, generating liquidity, and watching the first-day trading chart. Those moments still matter, but the game has changed.

The real measure of success now is durability. The projects that matter five years from now will be the ones that build credibility and verifiable trust, not just excitement.

At Tally, we've seen this shift firsthand. Our goal has always been to help teams not just launch, but build in a way that stands up to time, regulation, and institutional scrutiny.

"The real question isn't how fast you can get a token to market, it's whether that token will still be viable when real institutions show up. If your infrastructure isn't ready for that, you're building on sand." - @dennisonbertram

The problem: hidden fragility in token launches

In the early years of DeFi, chaos was part of the appeal. Projects could move fast and patch later. But that approach has limits.

Regulatory frameworks are catching up, and institutions are no longer watching from the sidelines. They are actively exploring custody, trading, and integration, but only for assets they can verify.

The biggest hidden weakness in many token launches today is the absence of provenance. Institutions can't rely on anonymous issuers, opaque disclosures, or unverifiable token contracts. Each of those gaps creates friction and risk.

Without verifiable identity and compliance, a token that looks successful in the short term can become unusable in the long run.

What KYI solves

KYI (Know Your Issuer) addresses that gap by turning issuer identity into an auditable, on-chain feature.

It binds a token's mint authority to a verified issuer identity, creating a cryptographic record that anyone can inspect. This simple step transforms how tokens are recognized and handled.

"KYI is about making issuer identity auditable in a way that fits how blockchains actually work, it's not adding bureaucracy; it's encoding trust directly into the asset." - @ChrisBrummerDr

A KYI-enabled token carries its own provenance. Custodians, exchanges, and funds can verify who issued it, when, and under what standards. No phone calls, no PDFs, no uncertainty.

That single layer of verifiable identity is what allows a token to move safely through regulated systems. It's the missing link between crypto's flexibility and finance's accountability.

Compliance as infrastructure, not overhead

Crypto has long treated compliance as an external pressure, something to be added later, once the product is built and the lawyers are called. This mindset doesn't scale, and many teams are suffering from being "invisible" to institutional participants.

"The future of DeFi isn't about making things more complex. It's about making them understandable to the systems that already move trillions of dollars every day. You don't win by rejecting those systems. You win by building something they can recognize." - @ChrisBrummerDr

In traditional markets, trust begins with provenance. Every bond, share, or derivative contract exists within a framework of disclosure and verified issuance. Institutions rely on that framework to manage risk.

KYI brings the same concept on-chain. It makes compliance composable, not external. Instead of a document stapled to a product, it becomes part of the product's architecture.

Tally x Bluprynt: institutional compliance for token launches

Tally and Bluprynt have partnered to deliver institutional-grade compliance infrastructure for token generation events (TGEs) and ongoing token operations. Together, we're building the tools that make KYI practical and accessible for crypto projects preparing for institutional participation.

Bluprynt builds the rails that make KYI usable. Its tools help teams translate policy requirements into verifiable, machine-readable formats.

With Bluprynt, projects can:

• Verify issuer identity using KYB/KYC infrastructure

• Generate MiCA-compliant white papers tied directly to token metadata

• Embed compliance metadata that institutions can automatically read and route

"We're building the rails for legitimacy in crypto. The tools that let you not only say you're compliant but prove it programmatically."

That proof is what makes institutional adoption practical. Instead of manual vetting, counterparties can verify compliance in seconds. The result is transparency that scales.

Bluprynt's collaborations with stablecoin issuers like Circle and Paxos show that this model is already gaining traction. The underlying principle is simple: credibility should be as composable as code.

Tally: launching tokens built to endure

Tally complements this by focusing on governance, launch, and sustainability. We've seen too many projects treat a launch as an endpoint rather than a beginning.

In practice, that leads to fragile systems: tokens that cannot evolve without breaking compliance, or governance structures that lose alignment over time.

"Our job is to make sure teams launch in a way that keeps them future-ready. That means having a structure that supports both self-governance and institutional participation. KYI gives us a way to anchor that structure in verifiable identity."

By integrating KYI through Bluprynt, Tally helps projects:

• Launch with verified issuers and clear provenance

• Align disclosures with jurisdictional requirements

• Maintain governance processes that evolve responsibly

• Build tokens that are custody- and listing-ready from day one

The goal is not just compliance. It's continuity—a structure that supports growth without retrofits or rebuilds.

Regulatory clarity as an accelerant

Regulation is often framed as a drag on innovation, but clarity accelerates adoption. Once institutions know the rules, they can participate at scale.

"U.S. regulators aren't slowing crypto down, they're professionalizing it. They're setting the standards that will allow traditional institutions to participate safely. That's the moment builders should be preparing for."

MiCA in Europe has already made this clear: exchanges cannot list assets without compliant whitepapers and verified issuers. The U.S. is moving in the same direction. These frameworks are not obstacles; they are signals of maturity.

The projects that align with them early will lead. Those that don't will face integration barriers that become harder to overcome with time.

Institutional readiness as a growth Strategy

The next phase of crypto growth will not come from retail speculation but from institutional participation. For that to happen, tokens must meet the same standards as any other financial instrument: identity, disclosure, and verifiable legitimacy.

KYI is what enables that transition. It creates a shared language between crypto and traditional finance, one that allows institutions to interact with tokens programmatically, without bespoke arrangements.

This kind of interoperability is what allowed the internet to scale. It will define how financial systems evolve as well. Tokens that can move safely across jurisdictions and compliance frameworks will unlock deeper pools of liquidity than ever before.

The cost of retrofitting legitimacy

When compliance is ignored at launch, projects often pay for it later. Delistings, frozen custody access, or stalled partnerships become expensive and public. Rebuilding trust after a credibility failure is far harder than embedding it from the start. Many institutions will never be able to interface with various protocols simply because the compliance and legitimacy wasn't present from the start.

KYI reverses that dynamic. By linking issuer identity to the asset itself, projects begin from a place of transparency. That foundation prevents most of the problems that force reactive compliance later.

The result is not more regulation, but fewer surprises. It's what lets serious builders focus on innovation without the constant risk of being blindsided by institutional requirements.

A market growing up

The collaboration between Tally and Bluprynt reflects a broader change in the industry's mindset. DeFi is growing up. The energy that once went into pushing boundaries is now being redirected toward building reliable systems that others can depend on.

"DeFi is entering its institutional era, the question now is not whether it will integrate with traditional finance, but how. Projects that can speak the language of compliance and credibility will lead that integration."

This doesn't mean sacrificing decentralization. It means creating bridges that allow decentralized systems to participate in global finance on equal footing. When legitimacy is composable, DeFi can expand without losing its core principles.

Building for the long game

For builders preparing to launch, there are a few questions are worth asking:

• Can a custodian safely hold your token today?

• Can a regulator or auditor verify its provenance without special access?

• Can a partner rely on your disclosures as live, verifiable data?

If the answer to any of these is no, the token may be operationally live but institutionally invisible.

Tally and Bluprynt are working to close that gap. KYI provides the identity layer, Bluprynt delivers the policy and compliance infrastructure, and Tally ensures the governance and operational continuity to make it all sustainable.

Together, these tools make it possible to build tokens that can scale responsibly: assets that are transparent by design rather than by enforcement.

Trust as infrastructure

The future of digital assets will belong to projects that understand that trust is not branding. It is infrastructure. It is the system of verifiable relationships that allows capital to flow and partnerships to form.

"You can't scale chaos. If we want to build systems that the world can rely on, we have to make trust composable. KYI is a step toward that."

This is where crypto's next phase begins: with legitimacy that can be proven, shared, and built upon.

It's not about slowing down innovation. It's about making sure the things we build can last.

Launch and scale with Tally → Get started

Turn compliance into composable, machine-readable trust with Bluprynt → Get started

Protocols use Tally's incentives and staking solution to return protocol revenue to token holders, reward long-term commitment, encourage governance participation, incentivize DeFi liquidity, and compensate network validators.

Key features of Tally's incentive and staking system:

• Multiple reward sources: Distribute rewards from protocol revenue, treasury assets, token emissions, or combine all three—in any ERC20 token or multiple tokens simultaneously

• Governance integration: Staked tokens retain full voting power, so holders don't have to choose between earning rewards and participating in governance. Optionally, make rewards conditional on active governance participation

• Validator support: Compensate stakers and operators for validating protocol security and running network infrastructure

• Stake streaks: Reward long-term commitment with increased rewards for continuous staking periods

• Liquid staking support: Enable token holders to earn rewards while keeping their tokens transferable and usable across DeFi

• Flexible eligibility criteria: Design custom requirements for earning rewards based on specific behaviors that benefit your protocol

• Seamless user experience: Your community can stake, track rewards, and manage positions through an intuitive interface

• Battle-tested contracts: Deploy with confidence using audited, open-source smart contracts

  

Learn more about staking features and use cases

Real protocols, real results

Leading protocols use Tally's staking solution to create compelling incentive and staking programs:

ZKsync is distributing 35 million $ZK through a delegation-based incentive program built on Tally's contracts and interface, offering up to 10% APR to token holders who stake and delegate.

Obol uses Tally's complete staking solution to power stOBOL, where contracts handle auto-compounding incentives while the interface makes participation seamless. With 11.05 million OBOL staked since launch, participants enjoy both immediate staking benefits and long-term value appreciation.

Case study: ZKsync combines staking with delegation incentives

ZKsync leverages Tally's staking contracts and interface to reward token holders for staking while providing additional incentives for delegation.

How it works:

• Dual reward structure: Earn returns through staking while supporting the protocol through delegation

• Competitive APR: Up to 10% annualized returns for participants

• Phased incentive distribution: Two three-month seasons with growing reward pools

  • Season 1: 10M ZK rewards for 400M tokens staked

  • Season 2: 25M ZK rewards for 1B tokens staked

• Seamless user experience: Stake and delegate in just a few clicks through Tally's interface

• Flexible participation: Choose your delegate while earning staking rewards

• Scalable infrastructure: Built to support expanded incentive mechanisms as ZKsync evolves

Learn more about ZKnomics Token Staking

Case study: Obol maximizes value with liquid staking and compounding incentives

Obol's stOBOL system uses Tally's smart contracts and interface to combine staking rewards with automatic incentive compounding and full DeFi compatibility.

How it works:

• Auto-compounding incentives: Rewards automatically accumulate and compound—no manual claiming required

• Intuitive dashboard: Stake, track rewards, and manage stOBOL positions through Tally's interface

• Liquid staking design: No lock-up periods—stOBOL is fully transferable at any time

• Stackable rewards: Use stOBOL as collateral in DeFi protocols while continuing to earn staking rewards

• Set-it-and-forget-it experience: Stake once and earn from multiple incentive streams automatically

Read about stOBOL's DeFi integration with Pendle

Ready to launch incentives and staking?

Tally provides everything you need—audited smart contracts and a polished interface—to create compelling reward programs that drive token holder engagement and protocol growth.

Explore the staking documentation or talk to our team to design custom incentive and staking systems with Tally.

Custom claim frontends and domains are developed in close collaboration with your team to maintain consistent branding and user clarity across all token operations. Optional transfer restrictions, vesting schedules, and lockup mechanisms integrate seamlessly with on-chain vesting providers and custodians. As your protocol evolves, Tally enables you to add staking, governance, and expanded multichain support.

Key features of Tally's token launch system:

• ICOs: Execute liquidity bootstrapping pools (LBPs) or other sale mechanisms with custom interfaces that simplify participation

• Airdrops: Distribute tokens to millions of recipients with gas-optimized claim processing

• Custom eligibility criteria: Define claim requirements based on on-chain activity, snapshot data, or allowlists—create targeted distributions that reward your community

• Branded claim experiences: Ship custom-designed claim pages with your branding and domain that provide clarity and consistency across all token operations

• Vesting integrations: Implement lockup periods and vesting schedules that integrate seamlessly with on-chain providers and custodians

• Multichain support: Launch tokens simultaneously across multiple EVM chains with unified supply management. Recipients claim on their preferred network without wrapped assets or bridging

Proven token launches at scale

Leading protocols use Tally to execute sophisticated token launches at scale:

Hyperlane distributed HYPER tokens to 235,000+ addresses across five chains simultaneously, with over 95% of claimers paying less than $1 in fees. The launch included native staking integration from day one.

Hyperwave executed its token sale through a custom-branded LBP interface built by Tally, simplifying participation and maximizing price discovery without requiring direct Balancer protocol interaction.

Case study: Hyperlane distributes tokens across five chains

Hyperlane partnered with Tally to execute the HYPER token launch with native claim support across five blockchain networks, distributing nearly 70 million tokens to over 235,000 addresses.

How it works:

• Native multichain deployment: HYPER launched simultaneously on Ethereum, Arbitrum, Base, Optimism, and BNB Chain using Hyperlane's Warp Asset framework. Users claimed directly on their preferred chain with one unified total supply

• Cost efficiency at scale: Over 95% of users paid less than $1 in fees to claim their HYPER. Multi-chain distribution prevented network congestion and maintained low transaction costs across seven Merkle distributors

• Day-one staking integration: stHYPER, the liquid staked version of HYPER, launched simultaneously with the base token on both Ethereum and BNB Chain, giving users immediate access to yield-bearing positions

• Infrastructure scalability: Tally's architecture handled 235,000+ concurrent eligibility checks during peak claim periods without performance degradation. The unified interface abstracted chain complexity through simple dropdown menus

• Seamless user experience: Recipients selected destination networks and completed claims through an intuitive interface—no technical knowledge required

• Reusable infrastructure: Hyperlane continues using the same battle-tested infrastructure for Expansion Rewards #3, launching October 21st, without rebuilding claim systems

Learn more about Hyperlane's token launch.

Case study: Hyperwave executes token sale with custom LBP interface

Hyperwave partnered with Tally to plan and execute its token sale using Balancer's liquidity-bootstrapping pool (LBP). Tally built a custom interface and provided end-to-end support to maximize participation.

How it works:

• Custom sale interface: Tally designed and deployed a branded UI that simplified LBP participation, making the sale accessible without requiring direct Balancer protocol interaction

• Flexible price discovery: The sale used Balancer's LBP with customizable bonding curves. Price gradually decreases until demand equilibrium is reached, ensuring fair price discovery

• Simplified participation: Community members purchased tokens through an intuitive interface instead of navigating complex DeFi protocols

• End-to-end planning support: Tally worked with Hyperwave to structure sale parameters, execution timing, and go-to-market strategy

• Proven sale mechanism: LBPs have successfully launched hundreds of tokens by preventing bot manipulation and enabling fair price discovery

Ready to launch your token? Launch and scale your token with Tally. We handle your airdrop, ICO, and vesting so you can focus on building. Talk to our team to get started.

By measuring and rewarding quality governance contributions, Tally enables protocols like the Obol Collective to create predictable economic incentives that attract and retain high-quality participants to their governance processes.

Delegate compensation isn't about paying people to hold tokens or rubber-stamp votes. It's about rewarding those who consistently engage with care, post structured rationales, and help the Collective navigate complex governance questions with thoughtfulness and integrity.

How it works

Compensation distribution system: Building on Tally's stOBOL infrastructure that solves the tradeoff between staking and governance, the delegate compensation system adds an additional layer of stakeholder alignment. Only delegates maintaining a Delegate Reputation Score (DRS) of 65 or higher over the past five proposals on average are classified as active and eligible for delegate compensation.

Tally has started to distribute 165,000 OBOL from a dedicated reward pool over six months, independent from existing staking rewards, using a square root model based on delegated voting power to reduce centralization risk and create flatter reward curves that better compensate smaller but engaged participants.

Read the original forum proposal.

Implementation: Tally built delegate compensation using the Staker contract architecture that integrates with the DRS oracle for eligibility verification while maintaining the same security model as Staker. The system leverages Tally's existing staking infrastructure to distribute rewards proportionally based on the square root of voting power, using OpenZeppelin's Math library.

Delegates can check their eligibility status directly on their Tally profile, view accrued compensation, and claim rewards at any time with no minimum amount required. Tally's infrastructure handles the complete user experience from eligibility verification to reward distribution, coordinating with Obol for governance requirements and Curia for reputation calculations.

The system includes smart contract functions for claiming rewards, checking unclaimed balances, and verifying delegate eligibility, with voting power snapshots updating every 3 weeks and fallback mechanisms if the oracle becomes stale. New delegates begin earning DRS scores with their first vote and become eligible for compensation immediately upon achieving a 65+ score, regardless of tenure length.

Note: Scores update every 21-day governance cycle with a 6-day delay after submission windows close, ensuring all proposals complete their voting periods before recalculation. Learn more about Tally's delegate compensation infrastructure.

Building aligned incentive structures

Obol's delegate compensation system illustrates how protocols can build economic structures that reward active contribution over passive token holding. By linking reputation scoring to delegate compensation the system establishes transparent reputational signals that align incentives with protocol success. Delegate compensation creates an incentive mechanism where protocols can reward both capital allocation and governance contribution, turning passive token holders into active protocol stewards.

If you’re interested in implementing staking, DRS, and delegate compensation, explore Tally’s best-in-class infrastructure → tally.xyz

Start earning OBOL → tally.xyz/gov/obol

Decentralized Autonomous Organizations (DAOs) have long sought to exist outside traditional legal structures under the banner of "code is law." In practice this was less a rebellion than a necessity: decentralized systems often lacked any effective recourse to courts, and code offered deterministic guarantees when law could not. For much of crypto’s early history, enforcement of legal judgments against protocols was difficult or impossible if parties could even be identified at all.

The joint-stock corporation, too, was not a market inevitability. Early thinkers assumed dispersed ownership would weaken discipline and lead to poor governance. The general partnership with its group liability was the preferred corporate structure. Adam Smith, for instance, warned in The Wealth of Nations (1776) that directors of joint-stock companies would tend to manage “other people’s money” negligently compared to partners managing their own (remind you of any DAO bashing Twitter/X posts?). The corporation endured because it was deliberately created by the state as a legal person with special powers. As John Micklethwait and Adrian Wooldridge observe in The Company: A Short History of a Revolutionary Idea (2003), the joint-stock corporation was never just a market evolution but a political creation: a state-sanctioned framework that provided liability shields and entity permanence in exchange for regulatory oversight and fiscal benefit. That history parallels the present: today’s legally enshrined, state‑chartered DAOs are following a similar trajectory toward legitimacy.

With a more receptive political climate, the state has become part of the DAO’s evolution. The idea of the DAO now collides with practical questions of legal recognition, personhood, and liability shields. Refusing to acknowledge the state does not erase it—it only invites confrontation. Increasingly, many of the most prominent DAOs are choosing state charters, a development welcomed by some and resisted by others, but clearly a new path forward for the industry.

Historical Parallel: The Corporation as a Legal Construct

The joint-stock corporation did not emerge from spontaneous market innovation. It was a creature of the state: a legal person chartered to carry out functions too large, too risky, or too political for ordinary partnerships. From the East India Company to the railroads, these charters were public-private bargains. In return for capital aggregation and legal personhood, the state received tax revenue, influence, and sometimes direct control.

A parallel that John Micklethwait and Adrian Wooldridge also mention is how early monarchs feared the permanence and sovereignty of monasteries and the Church: eternal institutions that evaded inheritance taxes and operated beyond sovereign reach. Modern regulators are similarly wary of DAOs, protocols and blockchain as a whole. Crypto-economic systems, like monasteries and the church, create structures that can live forever, control vast resources, and fall outside national jurisdictions. Effectively immune to state control on the digital level.

The DAO as General Partnership

DAO’s as general partnerships is a fairly well worn discussion in the crypto space. Despite claims of decentralization, many DAOs today function legally as general partnerships or have complicated off-shore structures designed to try and wrap them in a liability shield of some sort. Without formal incorporation, every participant may be jointly and severally liable—as seen in the CFTC's case against Ooki DAO. Today, we see that the lack of legal entities also hobbles growth of decentralized organizations as they are unable to (without great difficulty or inefficiency) contract for services or enter into business relationships.

When foundingTally.xyz, one of our original pitch ideas was that we could build a world where organizations incorporated software rather than jurisdictions. As powerful as this idea is, it’s also a bit naive. Incorporation is itself a state defined status. There is no incorporation without the state, without a charter. General partnerships are the default catch all of all other kinds of organizations. This made sense in the framework of “code is law” but in practice smart contracts can’t actually intermediate everything that happens in protocols: humans still remain in the loop, and these humans, absent a state charter, are very much exposed to the state.

The Coming Charters: DUNA, BORG, CLARITY

Legislation is catching up. The Wyoming DUNA (Decentralized Unincorporated Nonprofit Association) is not just a bill, it is law. And now, major protocols are beginning to adopt it. Most notably, Uniswap Governance has voted to establish its own DUNA entity ("DUNI"), creating a legally recognized wrapper around its on-chain protocol governance. This structure preserves decentralized decision-making while granting off-chain legal capacity to enter contracts, manage taxes, and provide liability protections for members.

This moment is historically significant. Just as the first corporate charters enabled railroads and global trading companies to scale, Uniswap’s DUNA adoption signals the normalization of state-chartered DAOs. Other frameworks, like BORGs and the federal Clarity Act, will likely follow in shaping how decentralized systems anchor themselves in law.

This is not a betrayal of decentralization but an evolution. Like the joint-stock corporation, DAOs may find power not in resisting the state, but in negotiating with it.

The Trade: Legal Personhood for On-Chain Capital

The state does not concede power freely. In exchange for limited liability, DAOs must make various concessions for various rewards: AML compliance, jurisdictional anchoring, identity standards. Builders must decide: are these compromises tolerable, or do they destroy the original premise?

For many the economic logic is irresistible. Stablecoins like USDC and USDT have shown that scale demands some recognition from the state. Circle's IPO and Coinbase's Base L2 illustrate a maturing ecosystem willing to engage with regulators—not to surrender, but to scale.

Today, success for many crypto projects also hinges on attracting institutional capital. Market forces themselves are pushing new products toward compliance, because institutions demand legal clarity and liability protection before committing capital. Teams are free to continue operating outside state charters in the cypherpunk spirit, but the underlying crypto‑economic forces are drawing serious projects toward state‑recognized structures. This mirrors the origins of the joint‑stock corporation: capital and scale was not possible without a state charter, and the same dynamic is now repeating with DAOs.

Toward a Synthesis: Law as Code, Code as Law

The early dream of "code is law" is giving way to a more complex synthesis: law encoded in contracts, enforceable both on-chain and in court (see: BORGS). Protocols may come to resemble chartered corporations with built-in governance, capital allocation, and liability protection.

This trajectory is being reinforced by capital markets. Institutional investors will not participate at scale without legal clarity, liability shields, AML compliance, and enforceable agreements. Just as the state charter made joint-stock corporations investable, state-recognized structures make DAOs investable today. The synthesis, then, is not only technical but financial: code formalizes governance, while law unlocks capital.

Rather than see this as a loss, crypto builders should recognize it as an opportunity: to reshape legal constructs using the expressive power of code. As the state moves into the room, it's not the end of the DAO—it may be its beginning.

Defining the DAO Through Law

That the industry has generally failed to agree upon a single concrete definition of what constitutes a DAO seems to suggest that the State has always been a silent participant in the process. Turns out, DAO’s are general partnerships unless chartered otherwise.

The question ahead is not whether DAOs will deal with the state, but how. The revolution isn't cancelled—it's just negotiating its terms. And just as the joint-stock corporation only unlocked its potential once capital could safely enter under a state charter, DAOs too will only achieve their full scale once institutional capital can flow through compliant, state-recognized structures.

Not every project will take this path. Just as partnerships and cooperatives coexisted alongside corporations, some DAOs will remain outside the chartered system. Despite the success of corporations, partnerships still survive. Cadwalader, Wickersham & Taft LLP a law firm founded in 1792 still endures in New York City as a partnership. Similarly many projects that seek to preserve a cypherpunk ethos: prioritizing privacy, censorship-resistance, and autonomy over access to institutional capital, will continue to exist. They may resemble historical cooperatives or mutual societies that deliberately chose smaller scale and member-centric governance over the compromises required to attract outside investment, but in doing so, they will provide a counterweight and a testing ground—reminding us that decentralization is not one thing, but a spectrum. The coexistence of chartered and unchartered DAOs will likely define the next chapter of this industry, with each path offering its own trade-offs of legitimacy, resilience, and innovation.

Staying up to date on regulatory developments prepares teams to remain competitive if regulation is signed into law. Tally tracks the latest updates and is building best-in-class compliance infrastructure for protocols to capitalize on the regulated crypto era.

Let’s take a look at everything that’s happened so far. 

The CLARITY Act Passes the House

The CLARITY Act officially passed the U.S. House of Representatives, marking a turning point for token projects, policy advocates, and decentralized governance ecosystems.

"The CLARITY Act will catalyze a New Golden Age of Tokens; where transparency, decentralization, and regulatory alignment are foundational." (The CLARITY Act of 2025: A New Golden Age of Tokens)

The Act establishes a two-phase regulatory pathway: tokens begin as investment contracts under SEC oversight where "issuers can raise up to $75 million within a 12-month window," then transition to "digital commodities" regulated by the CFTC once protocols meet decentralization criteria, including "no single entity or affiliated group controls more than 20% of the token supply or governance power."

The CLARITY Act’s framework would create a structured path for protocol teams to access U.S. institutional capital while building toward decentralization, replacing regulatory uncertainty with clear compliance standards. The Act also "clarifies secondary market trading of tokens previously issued in a securities offering will not be treated as securities transactions" once they achieve commodity status, removing barriers to U.S. exchange listings and institutional adoption that previously may have forced projects offshore.

Next steps: The CLARITY Act moves to the Senate, where Senate Banking Committee Chairman Tim Scott has developed a competing bill (the Responsible Financial Innovation Act of 2025) that builds on the CLARITY Act but introduces key changes. Senator Cynthia Lummis indicated that while the Senate wants to "honor as much of the House's work as we can," the final legislation will likely be "CLARITY as tweaked by the Senate.”  Senator Scott faces a September 30 deadline to advance his bill out of committee, with potential floor action and reconciliation with the House version expected in late 2025 or early 2026.

For more on The CLARITY Act:

• What Does the CLARITY Act Mean for Your Token?

• The CLARITY Act of 2025: A New Golden Age of Tokens

• Is Your Protocol a Mature Blockchain System Under the CLARITY Act?

Project Crypto

On July 31st, 2025, SEC Chairman Paul Atkins announced Project Crypto, an initiative to "modernize the securities rules and regulations to enable America's financial markets to move on-chain."

The initiative focuses on three critical areas for protocol teams: 

1. Establishing "clear guidelines that market participants can use to determine whether a crypto asset is a security" to end confusion around token classification.

2. Creating "a path for software developers to unleash on-chain software systems that do not require operation by any central intermediary" with protected status for decentralized protocols.

3. Implementing "an innovation exemption that would allow registrants and non-registrants to quickly go to market with new business models."

For protocol teams, Project Crypto represents a shift from enforcement-based regulation to frameworks designed to enable compliant innovation. Chairman Atkins declared "the days of convoluted offshore corporate structures, decentralization theater, and confusion over security status, are over."

Additionally, Tally’s CRO, Tyler, participated in a roundtable discussion with SEC Commissioner Hester Pierce at the Science of Blockchain Conference. They focused on creating regulatory clarity that keeps blockchain developers building in the U.S. Tyler emphasized Tally’s view that clear, actionable definitions of decentralization are essential for projects to navigate compliance.

For more on Project Crypto:

• What you need to know about the SEC's project crypto

• Project Crypto Twitter Thread

• Tyler's recap of the roundtable with Hester Peirce

• SEC Chairman Paul Atkins remarks at the Wyoming Blockchain Symposium

Senate Banking Committee Market Structure RFI

The Senate Banking Committee released a discussion draft of its Digital Asset Market Structure Legislation with a Request for Information seeking industry input on jurisdictional clarity, decentralization standards, and Safe Harbor provisions. 

Tally submitted a response advocating for "spelling out the jurisdiction questions in legislation instead of deferring to the SEC" to provide certainty for "distributed-ledger-based assets like network and protocol tokens" and proposing "quarterly progress reporting on: decentralization metrics, technical maturity milestones, governance evolution, and network independence" to create measurable pathways for protocols transitioning from securities to commodity status. 

The response emphasized supporting "the CLARITY Act defining a mature blockchain system as one where no person or group of persons under common control has the unilateral authority, directly or indirectly, to control or materially alter the functionality or operation of the blockchain system."

The RFI was a direct opportunity for protocol teams to influence regulatory frameworks, signalling a shift toward collaborative policymaking that incorporates technical expertise from the teams developing these systems.

Looking ahead

The CLARITY Act, Project Crypto, and Senate Banking Committee aim to bring clarity to token launches, institutional participation, and compliance requirements for crypto protocols.Teams that prepare for these frameworks may be better positioned to capitalize on regulatory clarity, potentially accessing U.S. institutional capital while reducing compliance risks as new rules develop

Tally is building best-in-class infrastructure for the world's most valuable networks to meet compliance standards with confidence. To learn more or get started reach out at tally.xyz/contact.

"Under my leadership, the SEC will not stand idly by and watch innovations develop overseas while our capital markets remain stagnant."

The announcement signals a turning point after years of regulatory uncertainty. Project Crypto promises clear rules for determining whether tokens are securities, processes for launching in the U.S., and regulatory frameworks designed specifically for blockchain technology. 

The initiative represents a significant shift in the SEC’s crypto policy, potentially unlocking U.S. institutional capital, streamlining compliance processes, and enabling direct U.S. market access to compliant protocols. As domestic institutional investors gain clearer guidance to participate in token markets, protocols aligned with Project Crypto's vision could be well-positioned to benefit from increased institutional participation and market opportunities.

While Project Crypto is in its early stages, understanding the details of the SEC’s crypto initiatives will position protocol teams for future success.

Token classification will become clearer

Chairman Atkins acknowledged "confusion over the application of the 'Howey test' has led some innovators to prophylactically treat all crypto assets as such. Despite what the SEC has said in the past, most crypto assets are not securities."

The SEC plans to develop "clear guidelines that market participants can use to determine whether a crypto asset is a security or subject to an investment contract." These guidelines will help teams "slot crypto assets into categories, such as digital collectibles, digital commodities, or stablecoins, and assess the economic realities of a transaction."

Classification clarity means teams will be able to design tokens that fit specific, well-defined categories. The emphasis on "economic realities" suggests the SEC will focus on actual token functionality rather than theoretical risks, creating opportunities for projects with functional utility to meet clear regulatory requirements. 

Decentralized protocols will have protected status

“It is essential that any crypto asset regulatory market structure create a path for software developers to unleash on-chain software systems that do not require operation by any central intermediary."

The SEC plans to "draw reasonable lines to distinguish intermediated and disintermediated activity" and create "rational and workable rules of the road for intermediaries that seek to operate on-chain software systems."

This distinction signals projects that limit centralized control will be classified as a distinct asset class with tailored regulatory frameworks. 

Read early drafts of decentralization criteria and explore current on-chain governance frameworks.    

Regulatory flexibility for innovation & U.S. token launch viability 

The SEC plans to create "an innovation exemption that would allow registrants and non-registrants to quickly go to market with new business models and services that do not neatly fit within our existing rules and regulations."

Under this exemption, "innovators and visionaries will be able to immediately enter the market with new technologies and business models but will not be required to comply with incompatible or burdensome prescriptive regulatory requirements that hinder productive economic activity."

Additionally, Chairman Atkins declared: "The days of convoluted offshore corporate structures, decentralization theater, and confusion over security status, are over." The SEC will establish "clear and simple rules of the road for crypto asset distributions, custody, and trading."

Project Crypto aims to create frameworks for domestic token distributions to avoid regulatory complexity, including specific provisions for airdrops, network rewards, and initial token offerings. New token models will have pathways to launch with purpose-fit compliance rather than waiting for specific regulatory approval.

Looking ahead

Project Crypto represents the foundation for a new era of regulated crypto innovation in America.  The SEC plans to advance from case-by-case crypto enforcement to comprehensive frameworks designed for digital assets. Project Crypto aims to establish clear classification guidelines, domestic launch frameworks, and regulatory flexibility for innovation.

Teams that prepare for these frameworks may be better positioned to capitalize on regulatory clarity, potentially accessing U.S. institutional capital while reducing compliance risks as new rules develop. As domestic institutional investors gain clearer guidance to participate in token markets, protocols aligned with Project Crypto's vision could be well-positioned to benefit from increased institutional participation and market opportunities.

At Tally, we’re building the infrastructure to help teams achieve institutional-grade compliance in the evolving regulatory landscape. The world’s most valuable networks use Tally to manage the complete token lifecycle and reach maturity with speed and confidence.

Follow Tally on X --> @tallyxyz
Follow Tally on LinkedIn --> linkedin.com/tallyxyz

While the bill still has a few more steps before being signed into law, the Act establishes clear frameworks for achieving mature blockchain status that teams can implement today.

Why Commodity Classification Matters

The CLARITY Act establishes specific criteria for when tokens qualify as digital commodities under CFTC oversight versus remaining securities under SEC jurisdiction. Commodity classification provides projects with a defined pathway under the CLARITY Act's framework, while security classification continues under existing securities laws with the SEC's associated requirements and limitations. For protocols, this distinction affects fundamental decisions around token design as each classification comes with varying compliance obligations that teams must navigate throughout the token’s lifecycle.

The CLARITY Act defines criteria for a token to transition from a security to a commodity:

Digital Commodity: "A digital asset that is intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system." The Act specifies this includes digital assets "used to transfer value between participants," "used to access the activities or services of the blockchain system," "used to participate in the decentralized governance system," or "used or removed from circulation in whole or in part to pay fees or otherwise verify or validate transactions.” (Section 103)

Mature Blockchain System: "A blockchain system, together with its related digital commodity, that is not controlled by any person or group of persons under common control." Key requirements include no entity having "unilateral authority to control or materially alter the functionality, operation, or rules" of the system, no entity controlling "20 percent or more of the outstanding voting power," and "no digital commodity issuer, digital commodity related person, or digital commodity affiliated person beneficially owns, in the aggregate, 20 percent or more of the total amount of units of the digital commodity." (Section 205)

Certification Process: The CLARITY Act establishes that "a digital commodity issuer, digital commodity related person, digital commodity affiliated person, decentralized governance system of the blockchain system, or a registered digital commodity exchange, or any other appropriate person as designated by the Commission, may certify to the Commission that the blockchain system to which a digital commodity relates is a mature blockchain system." The certification must include "such information that is reasonably necessary to establish that the blockchain system is not controlled by any person or group of persons under common control." The certification becomes effective after 60 days unless the Commission objects or "determines that the blockchain system is not a mature blockchain system." (Section 205)

Designing Tokens for Compliance

Token design should focus on these mechanisms to meet the criteria of a mature blockchain system: Distributed Control, Functional Utility, and Open Source and Programmatic System.

Distributed Control

The CLARITY Act requires mature blockchain systems be "not controlled by any person or group of persons under common control" and establishes ownership concentration limits. No entity may have "unilateral authority to control or materially alter the functionality, operation, or rules" of the system or control "20 percent or more of the outstanding voting power." Additionally, "no digital commodity issuer, digital commodity related person, or digital commodity affiliated person beneficially owns, in the aggregate, 20 percent or more of the total amount of units of the digital commodity." Projects should design governance systems where token holders collectively control protocol decisions and implement allocation strategies that prevent excessive concentration among insiders within these limits. (Section 202, Section 205)

Projects should design governance systems where token holders collectively control protocol decisions through transparent, decentralized mechanisms, while implementing allocation strategies that prevent excessive concentration among insiders, founders, or early investors. The Act explicitly recognizes a decentralized governance system is not considered "a person or a group of persons under common control," providing regulatory clarity for genuine community-driven decision-making. With the Act's 20% aggregate ownership limit for digital commodity issuers and related persons, careful allocation planning and governance participation records help demonstrate that protocol changes stem from collective consensus rather than centralized control.

Functional Utility

The CLARITY Act requires that a digital commodity be "intrinsically linked to a blockchain system, and the value of which is derived from or is reasonably expected to be derived from the use of the blockchain system." A digital asset qualifies as intrinsically linked when it is "directly related to the functionality or operation of the blockchain system or to the activities or services for which the blockchain system is created or utilized," including where the digital asset is "used to transfer value between participants in the blockchain system," "used to access the activities or services of the blockchain system," "used to participate in the decentralized governance system of the blockchain system," "used or removed from circulation in whole or in part to pay fees or otherwise verify or validate transactions on the blockchain system," or "used as payment or incentive to participants in the blockchain system to engage in the activities of the blockchain system." Additionally, for mature blockchain systems, "the digital commodity has a value that is substantially derived from the use and functioning of the blockchain system." (Section 103, Section 205)

Tokens should function as essential components for network utility such as transaction fees, staking mechanisms, and service access. The Act requires tokens be intrinsically linked to the blockchain system and that their value derives from network use, making documentation of specific operational use cases important for demonstrating compliance.

Open Source and Programmatic System

The CLARITY Act requires that a mature blockchain system "is composed of source code that is open source" and "operates, executes, and enforces its operations and transactions based solely on pre-established, transparent rules encoded directly within the source code of the blockchain system." Additionally, the system must not "restrict or prohibit based on the exercise of unilateral authority any person, other than a digital commodity issuer, digital commodity related person, or digital commodity affiliated person from engaging in the activities the blockchain system is intended to provide." The Act also specifies that "no person or group of persons under common control possesses a unique permission or privilege with respect to functionality, operation, or rules of consensus or agreement of the blockchain system or its related digital commodity," unless such changes address "errors, regular maintenance, or cybersecurity risks" and are "adopted through the consensus or agreement of a decentralized governance system." (Section 205)

The token's underlying blockchain infrastructure must operate transparently with publicly accessible source code and automated execution based on predetermined rules. The Act requires open source code and prohibits unilateral authority over system operations, with limited exceptions for maintenance or security issues that follow decentralized governance processes.

Looking Ahead

The CLARITY Act represents a turning point for crypto regulation, establishing clear pathways for tokens to achieve compliance. The Act elevates the importance of decentralized governance as projects must demonstrate distributed control and community-driven decision-making through transparent, measurable participation. Understanding what constitutes a mature blockchain system and designing tokens accordingly positions protocols for success under the CLARITY Act.  

At Tally, we're developing the infrastructure to help teams achieve compliance in the CLARITY Act era. The world’s most valuable networks use Tally to manage the complete token lifecycle and reach maturity with speed and confidence. 

Ready to launch? Reach out at tally.xyz/contact .

Read the full CLARITY Act Bill here.

For crypto-native builders, the CLARITY Act offers a concrete regulatory framework to launch tokens, raise capital, and progressively decentralize. 

Token Classification

The Clarity Act provides a clear regulatory pathway for tokens.

Initial Phase (Section 202): Tokens sold during fundraising are classified as investment contracts and remain under SEC oversight. These offerings are subject to strict conditions:

• Issuers can raise up to $75 million within a 12-month window 

• No individual purchaser may acquire more than 10% of the total supply at issuance

• Only U.S.-based, non-shell companies in good standing are eligible

• Detailed offering disclosures — including source code, financial statements, roadmaps, and risk factors — must be filed with the SEC in advance 

Decentralized Phase (Section 205): Once protocols meet specific decentralization criteria, tokens transition to a new legal category: “digital commodities,” regulated by the CFTC. This transition is enabled through a Certification of Decentralization, which grants a rebuttable presumption that the token is no longer a security.

This split replaces the ambiguity of the Howey Test with a structured, phased compliance regime. It allows projects to fundraise and operate under SEC oversight while building toward long-term decentralization.

Defining Decentralization

To qualify as a “mature blockchain,” a network must meet clear thresholds (Section 205(b)):

• No single entity or affiliated group controls more than 20% of the token supply or governance power

• The project operates on public, open-source infrastructure

• No centralized party can unilaterally alter the ledger

• The network has demonstrable, independent user activity
  

Once these conditions are met, issuers can file a “Certification of Decentralization”, triggering a rebuttable presumption that their token is a commodity. 

Safe-Harbor and Reporting Requirements

The Clarity Act creates a regulatory onramp for projects to reach maturity:

• A safe harbor for token offerings of up to $75M over 12 months, with no full SEC registration required (Section 202)

• Issuers must publish detailed offering disclosures — including financial statements, development roadmaps, technical documentation, and token distribution (Section 202)

• Projects must file semiannual updates and event-driven disclosures until they reach decentralization (Section 202)

• The safe harbor period lasts up to four years, after which projects must certify decentralization or face additional compliance measures
  

Importantly, insiders are subject to 12-month lockups and strict volume limits on sales during the immaturity phase—further aligning incentives with long-term decentralization.

The Role of Governance

Governance plays an important role in the CLARITY Act.

Protocols are required to demonstrate decision-making is distributed, not dictated by a single entity or entities holding the majority of voting power. On-chain indicators like active tokenholder voting, transparent delegate systems, and open proposal processes will support legal claims of decentralization. The Act codifies what many have already operationalized as a signal of legitimacy and formalizes it as a regulatory standard (Section 205(b)).

Secondary Market Clarity

The CLARITY Act clarifies secondary market trading of tokens previously issued in a securities offering will not be treated as securities transactions, as long as the tokens have transitioned into digital commodities (Section 203)

This removes a major blocker to U.S.-based exchange listings. It also authorizes CFTC-regulated entities, including Digital Commodity Exchanges (DCEXs), to facilitate token trading legally without conflicting SEC jurisdiction (Section 401)

Jurisdictional Split: SEC vs CFTC

The Act establishes bright lines between the SEC and CFTC:

• SEC oversees token fundraising, initial sales, fraud enforcement, and mixed-asset platforms (e.g. ATS trading securities + commodities) (Sections 201-204)

• CFTC takes over once the token is certified as decentralized and trades as a commodity (Section 401)

• Joint rule-making will cover gray zones and dual-use tokens
  

Looking Ahead

The CLARITY Act will catalyze a New Golden Age of Tokens; where transparency, decentralization, and regulatory alignment are foundational.  With regulatory clarity, builders can move faster, raise responsibly, and scale with confidence.

At Tally, we’re building tools to support the full token lifecycle — from compliant token launches to real-time governance analytics and decentralization reporting. Tally is the  infrastructure behind the next generation of institutional-grade tokens. We’re building toward a world where launching a compliant, decentralized network isn’t just possible — it’s the standard.

Ready to launch? Reach out at tally.xyz/contact .

Read the full CLARITY Act Bill here.

The CLARITY Act of 2025, scheduled to go to the U.S. House of Representatives for a vote tomorrow afternoon, unlocks a clear playbook for tokens to win as the new mechanism for capital formation and ownership. The CLARITY Act opens up a new playbook for raising capital via ICOs, governing networks with minimal bureaucracy, and returning value to tokenholders.

2025 will be remembered as the year tokens go mainstream.

Launching Tokens via ICOs Instead of Airdrops

Introduced in May and recently approved by the House Financial Services and Agriculture Committees, the CLARITY Act of 2025 explicitly defines digital assets—distinguishing “digital commodities” (like utility tokens) from securities—and allocates oversight between the SEC and CFTC. It creates a clear exemption path for token sales under $75 million and establishes unified rules for token issuers, exchanges, and custodians.

Here’s why I think ICOs are back—and a clear improvement over airdrops:

While both airdrops and ICOs distribute tokens, ICOs offer greater value to teams building long-term projects. ICOs raise capital; airdrops do not. Projects need funding to develop products, hire talent, and bootstrap liquidity, and ICOs provide a direct way to secure those resources from users who believe in the mission.

ICO participants have skin in the game. By committing capital, they become financially and emotionally invested, making them more likely to stay involved, participate in governance, and contribute to the ecosystem. Airdrops often fail to create this connection. Many recipients sell immediately or disengage, and even carefully designed eligibility systems struggle to prevent Sybil attacks or passive participation.

ICOs are starting to take off. On June 9, 2025, the Plasma project — a Bitcoin sidechain for stablecoins — saw its public sale vault on Echo’s Sonar platform overflow with $500 million in deposits within five minutes, oversubscribed 10× for a planned $50 million token sale. pump.fun, the Solana-based token launchpad, has also leaned into a new wave of public token sales. On July 12, 2025, it launched the PUMP token, a community-driven ICO that raised $600 million in 12 minutes.

Removing Unnecessary Bureaucracy from Governance

The CLARITY Act of 2025 finally enables streamlined decentralized governance. Under the Act, a decentralized governance system is any transparent, rules-based system where decisions are made collectively—not by a single person or group under effective control. This includes systems using public code, open participation, and distributed decision-making—meaning core contributors aren’t treated as part of a centralized entity unless they retain disproportionate control. We’re starting to see exciting examples of removing unnecessary bureaucracy from on-chain governance play out in practice:

• The Arbitrum Foundation released “A Vision for the Future of Arbitrum,” outlining its intent to empower Arbitrum-aligned teams (AAEs) to serve as delegates, vote on strategic decisions, and help execute operations collaboratively—demonstrating active core team involvement in governance.

• In June 2025, Morpho announced that its nonprofit arm (Morpho Association) would fully absorb Morpho Labs SAS, a for-profit entity, effectively merging equity control into the MORPHO token and aligning core team contributions directly with tokenholder interests.

• In his widely discussed essay, “The End of the Foundation Era in Crypto,” MilesJennings of a16z argues that core contributors should be empowered to engage directly in governance, product decisions, and resource allocation without hiding behind artificial legal entities.

Unlocking Token Value Accrual

The CLARITY Act of 2025 outlines clear mechanisms for token value accrual. The Act defines a "digital commodity" as a token intrinsically tied to its blockchain's operation or use and excludes such tokens from being treated as securities—so long as they meet criteria like peer-to-peer transferability and blockchain-based issuance.

The industry is responding quickly:

• Ethena’s governance proposed enabling a fee switch that directs a share of protocol revenue to sENA stakers, aligning token value with protocol usage. The Ethena Foundation approved the proposal, and the Risk Committee set clear milestone metrics (e.g., USDe circulation and revenue levels) before activation.

• A proposal in the Compound DAO aimed to direct 30% of protocol revenues to staked COMP holders. This was framed as “shareholder activism” —ensuring tokenholders receive returns in proportion to usage fees, much like shareholders in a traditional company.

• Uniswap’s DAO has voted on activating a fee switch granting part of swap fees to UNI tokenholders. A pilot proposal aims to implement a small fee (e.g., 10% of certain pool fees) to test its effect on liquidity and user impact. This enables value transfer from protocol usage to holders via on-chain governance.
  

The Bottom Line

The CLARITY Act of 2025 is the catalyst the industry’s been waiting for. It clears the legal fog around tokens, unlocking new ways to fund, govern, and scale blockchain-based systems. It’s not just about compliance — it’s about unleashing a better model for ownership. This is the moment the crypto ecosystem grows up. And it’s just getting started.

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