A nonprofit once handed back roughly $500 million and dissolved itself on purpose. Here is what that taught crypto about legal structure, onchain governance and who actually holds power.

In May 2021, a nonprofit gave away 84,000 governance tokens. At the time they were worth close to $500 million.

Then it shut itself down. On purpose.

That nonprofit was the Maker Foundation. The protocol it had been stewarding is known today as Sky Protocol.

And that single decision still frames a question every onchain project eventually has to answer out loud.

Who actually runs this thing?

There are three answers in circulation. A DAO. A foundation. A company. Most people treat them as competing options.

They are not. They are layers. And the protocols that hold up under pressure tend to use all three.

DAO vs Foundation vs Company: What Actually Separates Them

Short version first.

• A DAO is a decision-making system. Token holders vote, code executes. No registered office, no signature on a lease.
• A foundation is a legal entity with no owners. It can hold IP, sign contracts, publish reports and instruct a law firm. It is not supposed to control the protocol.
• A company is a legal entity with owners. Fast, familiar, easy to hire through. It also has a boss, which is exactly the problem.

The real dividing line is not ideology. It is far more boring than that.

Who can a court sue. Who can open an account. Who signs when a vendor asks for a signature.

A DAO, on its own, cannot sign anything. That gap is the entire story.

Why a Pure DAO Leaves Token Holders Legally Exposed

Here is the part most “what is a DAO” explainers skip.

If a group acts together for profit without registering an entity, most legal systems already have a default box waiting: general partnership, or unincorporated association.

In a general partnership, members are personally liable for the group’s debts.

That is not hypothetical anymore.

In CFTC v. Ooki DAO, a federal court in California accepted that a DAO could be sued in its own name as an unincorporated association made up of its token holders.

The regulator’s position was blunt: vote your governance tokens, and you are a member.

Members of a for-profit unincorporated association can be personally liable under partnership principles.

An earlier case, Sarcuni v. bZx DAO, noted that governance token holders could be treated as members of a general partnership under California law.

Read that twice if you hold governance tokens and vote with them.

This is why “we are just a DAO, we have no entity” stopped being a flex around 2023. Governance is not a shield. Governance without a legal wrapper is exposure.

The Crypto Foundation Structure Is a Legal Wrapper, Not a Boss

Foundations exist to absorb that exposure without becoming a boss. Three shapes dominate.

• Cayman foundation company. Ownerless. Run by a small board or council, with token holders named as beneficiaries. Common for large token ecosystems holding IP and contracts.
• Swiss foundation. Strong reputation, better banking access, higher running costs.
• Wyoming DUNA. A US nonprofit association purpose-built for DAOs, effective July 1, 2024. No mandatory board. Bylaws can point directly at onchain votes. Members are shielded from the association’s debts.

The catch is honest and worth saying out loud. A foundation fixes the paperwork problem by creating a small group of humans who hold a pen. That is a genuine centralization cost.

Which is why wording matters. The footer of skyeco.com reads:

“This website is managed by Sky Frontier Foundation (SFF). The SFF is an independent entity and does not have authority over Sky Protocol, its smart contracts, or governance decisions.”

That is a foundation publicly disclaiming control over the thing it supports. Not modesty. Architecture.

The Company Model Buys Speed and Cannot Shed Control

Companies are still everywhere in crypto, for good reason. You can hire. You can sign an engagement letter. You can buy insurance.

What you cannot do is make the control disappear.

Regulators have not drawn a neat line between “the DAO” and “the dev shop.”

In token enforcement actions, legal analysts note that agencies have named any company involved with the token, development companies included.

If your company holds admin keys, your decentralization story is a marketing asset, not a legal defense.

So the pattern that actually emerged is not DAO or foundation or company. It is:

• DAO for authority
• Foundation for legal capacity
• Independent companies for execution

Three layers, deliberately kept apart.

How Sky Ecosystem Splits Authority, Publishing and Execution

Sky Ecosystem is a clean worked example, because each layer is named differently on purpose.

• Sky Governance holds authority. Staked SKY activates voting power over risk parameters, collateral types, debt ceilings and protocol upgrades. Proposals move through forum review, then onchain voting, then execution. Once executed, a change cannot be reversed directly. It can only be challenged by passing a new proposal.
• Sky Frontier Foundation publishes. Reports, disclosures, formal positions. It does not set parameters.
• Sky Agents execute. Spark, Grove, Obex, Osero and others are independent capital allocators. They access USDS liquidity under governance-set risk parameters and deploy it. They are not subsidiaries.

The naming discipline is not pedantry. It is the difference between “Sky Governance voted to change the rate” and “the foundation changed the rate.” Only one of those is true, and only one survives a regulator reading it.

Scale check. Sky Protocol currently shows roughly $14.15B in Total Collateral backing about $11.48B in stablecoin supply.

Across the wider landscape, DeepDAO data put all DAO onchain treasuries above $26B combined in Q1 2026. This is not a governance thought experiment.

Where the Sky Savings Rate, sUSDS and USDS Fit In

Structure feels abstract until it touches yield. Here is exactly where it does.

• USDS is the base stablecoin. Independent allocators draw it against governance-approved collateral.
• Sky Agents deploy that liquidity into diversified strategies and pay for the access.
• Those payments accrue as protocol revenue.
• The Sky Savings Rate is funded from it. Variable, and set by Sky Governance rather than a pricing committee.
• sUSDS is how you hold it. Supply USDS, receive sUSDS, and the position accrues automatically. No lockups, no fees to exit.

So the governance question is a yield question.

If you hold sUSDS, the rate you receive is the output of a public process with a public record of who decided what and when.

You can read the forum thread. You can read the executed spell. You can check the dashboard.

Compare that to a rate that changed because an unnamed committee met on a Tuesday.

The 2026 Shift: DAO Legal Structures Are Coming Onshore

Two things moved the conversation recently.

First, the Uniswap Foundation proposed moving Uniswap Governance into a Wyoming DUNA, named DUNI. If adopted it becomes the largest DAO using the statute.

A coalition of crypto organizations then wrote to the US Treasury asking for federal recognition of the DUNA model.

Second, credit agencies started grading governance. When S&P Global assigned Sky Protocol a B- issuer credit rating, the first ever given to a DeFi protocol, it flagged governance concentration and low voter participation as risk factors. Not code quality. Governance.

That is the real trend. Governance design is now a credit input.

And the numbers deserve honesty. Most DAO proposals draw participation in the 5% to 15% range.

An OpenZeppelin governance review found that in 17 of 23 major DAOs, the top 10 delegates held enough voting power to pass a proposal on their own.

Decentralization on paper is not decentralization in practice.

So Which Structure Should a Protocol Actually Pick?

A rough decision frame.

• Public infrastructure with a global contributor base? Foundation plus DAO.
• Distributing revenue to holders? A nonprofit DUNA will not fit. Look at LLC structures.
• Pre-launch with a small team shipping fast? A company, plus a credible plan to reduce control.
• Already decentralized and worried about member liability? A DUNA or an offshore foundation, and stop delaying.

The one answer that is clearly wrong is doing nothing and hoping the word “decentralized” holds up in court. Ooki settled that argument.

The Question Nobody Has a Clean Answer To

Here is what I keep circling back to.

The Maker Foundation dissolved itself in 2021. Sky Frontier Foundation exists today and openly disclaims authority over the protocol.

Both were the right call at the time, which suggests these structures are not permanent identities at all. They are stages.

So, a question worth arguing about below.

If a foundation’s job is to eventually make itself unnecessary, how do you tell the difference between one genuinely winding down its influence and one quietly becoming the boss?

I have a view. I would rather hear yours first.

DAO vs Foundation vs Company: Three Ways to Run the Same Thing was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the world of cryptocurrencies, a “blacklist” usually means a list of addresses, accounts, or smart contracts that are banned from sending, receiving, or using tokens in centralized platforms — sometimes, even in some “decentralized” platforms, too. Governments and regulators use these lists to enforce financial laws, but they also raise hard questions about privacy and freedom in crypto. With pressure growing, many are asking: can truly decentralized systems survive blacklists?

Some distributed ledgers, like Ethereum, have had to walk a careful line between legal compliance and maintaining their open nature. Meanwhile, alternative networks like Obyte offer a different approach that could make censorship much harder. Let’s explore what’s happening, what’s at risk, and where things could go from here.

Blacklists and Ethereum — A Growing Challenge

Ethereum, the second-largest crypto network by market value, has faced several blacklist controversies. For example, after the U.S. sanctioned the privacy tool Tornado Cash in 2022, many Ethereum apps and services blocked addresses linked to it. Even stablecoins like USDC froze accounts that regulators flagged.

These moves show how central players in crypto ecosystems — like token issuers — can control access. Although distributed ledgers and smart contracts are supposed to run without middlemen, outside events can force changes that break this ideal. Developers are left caught between building open platforms and following real-world laws. For users, the consequences are even clearer: your assets could become unusable overnight if they land on a blacklist. For instance, if you, as a US citizen, mixed some funds on Tornado Cash and authorities found out.

Censorship in crypto doesn’t just block a few bad actors — it can reshape entire networks. After Ethereum switched to proof-of-stake (PoS), “validators” became the new gatekeepers (replacing mining pools), and some started filtering transactions to avoid dealing with blacklisted addresses. Tools like MEV-boost made it easier for them to choose which transactions to include.

This behavior weakens the original promise of crypto neutrality. Instead of treating every user equally, censored networks prioritize compliance over fairness. If enough “validators” cooperate with regulators, blockchains could lose their independence and start resembling traditional financial systems. Over time, this could drive away users who once turned to crypto for freedom.

Crypto’s Vulnerability: Custodians and Compliance

Even though crypto itself is designed to resist censorship to a degree, centralized players like exchanges and custodians are more vulnerable. Besides token issuers in blockchains, many firms choose to comply with regulations to protect their reputation and continue operating legally.

Major exchanges like Coinbase and Binance have enhanced Know Your Customer (KYC) and Anti-Money Laundering (AML) practices, restricting transactions linked to sanctioned entities. Although this protects their legal standing, it limits cryptocurrencies even more and potentially threatens the core ethos of crypto freedom. On the other hand, governments wouldn’t allow them to operate at all without this compliance. It’s an inescapable conundrum.

The tension between maintaining decentralization and complying with regulations is a delicate balancing act. While some projects strive to uphold the original ideals of financial autonomy, many large-scale operations prioritize business sustainability over ideology.

Alternative Approaches

At the very least, we can fix internal blockchain censorship by picking another network. Not all crypto platforms are built the same. Obyte, for example, uses a Directed Acyclic Graph (DAG) instead of a blockchain. There are no miners or “validators” deciding which transactions go through. Instead, transactions are added to the DAG directly by users themselves, removing centralized bottlenecks that can be targeted by regulators.

This structure makes censorship much harder. Since no single group controls transaction approval, it’s almost impossible to blacklist an account or address globally. In a world where blacklists are spreading, architectures like Obyte’s could offer real alternatives.

However, even the most censorship-resistant systems face practical limits. Crypto projects still need bridges, gateways, and exchanges to interact with the broader economy. In other words: you’ll need to turn your crypto into USD, EUR, or whatever fiat currency at some point. These points of contact, as we mentioned above, are often under legal pressure and can block users even if the underlying network resists.

Obyte is better protected at the protocol level, but users still risk exposure when cashing out or connecting to external services. No system is completely immune because people still live under legal systems. Designing censorship resistance is essential, but managing the risks outside the network matters just as much. But hey, good news? Crypto bans are rarely effective, even when exchanging for fiat.

Why Bans Often Fail to Stop Crypto

Despite regulatory efforts, crypto use persists in countries with bans — and platforms with sanctions are still very much used. Chainalysis’ Global Crypto Adoption Index shows that 50% of the top 10 countries with the highest crypto adoption rates have either full or partial bans. China, for instance, maintains strict regulations, yet still ranks within the top 20 for crypto usage.

In nations like Bangladesh, Egypt, and Morocco, where crypto is officially forbidden, enforcement struggles to keep pace with user activity. Individuals continue to buy, sell, and trade cryptocurrencies, often using decentralized platforms or peer-to-peer (P2P) networks to evade restrictions.

This isn’t just a sense of rebellion. Economic instability plays a significant role. In places where local currencies are unstable, citizens turn to crypto to preserve their wealth. In Venezuela and Nigeria, for example, crypto provides an alternative to hyperinflation and tight government controls. The decentralized design of cryptocurrencies makes it nearly impossible for authorities to shut down networks entirely, even if individual users may face risks.

Bans often push crypto activity into underground markets, removing the protective layers that regulation could have provided. Instead of stopping usage, heavy-handed laws often make crypto ecosystems more opaque and harder to supervise.

How Decentralized Players Are Facing Restrictions

Even as centralized players increasingly comply, decentralized systems remain resistant. Protocols without central authorities — like certain DeFi platforms and decentralized exchanges (DEXs) — cannot easily enforce blacklists or freeze funds. Without a governing body, these platforms continue operating globally, regardless of local bans.

Individual users have also been adapting creatively. Although Tornado Cash was sanctioned by the U.S. Treasury (until November 2024) and its domains and website were taken down, users still accessed it through decentralized interfaces like IPFS. According to Dune Analytics, users deposited variable amounts after the sanctions, up to $22 million in September 2024, despite legal hurdles.

Speaking of those legal hurdles, six users of Tornado Cash, backed financially by Coinbase, sued the U.S. Treasury Department after it sanctioned the mixer. In November 2024, the U.S. 5th Circuit Court of Appeals ruled that the Treasury overstepped its authority because Tornado Cash’s decentralized smart contracts aren’t “property” that can be sanctioned under current law. The court sided with the users, overturning the sanctions. Individuals are fighting back and winning some battles, too.

On the other hand, data from the Atlantic Council shows that at least 27 countries have imposed full or partial crypto bans. Yet crypto adoption is still highest in regions under pressure. In Nigeria, even with restrictions, over 46% of the population reports owning or using cryptocurrencies. In China, underground networks and offshore exchanges allow continued participation in the global crypto economy.

Necessity drives innovation. In authoritarian regimes, citizens often use crypto to protect savings, send remittances abroad, or circumvent local banking restrictions. Bans, instead of halting crypto activity, push it further into decentralized, less traceable channels. Crypto’s foundational trait — censorship resistance — proves indispensable where freedom is under threat.

Toward a Freer Crypto Future

The rise of blacklists highlights a major tension in crypto: can these technologies stay open and neutral while fitting into the regulated world? Blockchains that allow easy censorship might survive in the short term, but they risk losing their core values — and users.

Systems like Obyte show that it’s possible to prioritize user freedom at the design level. Still, the bigger battle lies in how users, developers, and regulators shape the evolving crypto space. Whether people choose resilient platforms or prioritize convenience will define what crypto becomes in the next decade — and whether it stays true to its original vision.

As personal liberties continue to erode across the globe, users will likely, over time, gravitate toward more open and decentralized platforms. The future belongs to decentralization, as centralization has led to widespread surveillance, media manipulation, discrimination, financial censorship, data breaches, and countless other problems.

Featured Vector Image by pikisuperstar / Freepik

Originally Published on Binance Square

The Crypto Blacklist Problem: Sanctions and Restrictions was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.