The End of the Encryption Foundation Model: Moving Towards More Efficient Blockchain Governance

The encryption foundation was once a key tool for advancing the blockchain industry, but it has now become the biggest obstacle to development. With the emergence of new regulatory frameworks, the industry has welcomed a rare opportunity to abandon the encryption foundation model and its various issues, and instead adopt clearer and more scalable mechanisms to rebuild the ecosystem.

The encryption foundation model initially originated from the decentralized idealism of early founders, aiming to serve as a neutral manager of network resources. However, over time, increasing regulatory pressure and market competition have caused this model to deviate from its original intention:

1. Regulatory testing has forced founders to abandon or obscure their participation in their own networks.
2. The project party sees it as a shortcut to achieving decentralization.
3. Becomes a tool for evading regulation.

The encryption foundation model has many structural defects:

1. Lack of effective interest coordination mechanisms
2. Unable to achieve scalable growth
3. Forming new centralized control

With the emergence of a new regulatory framework based on control, the illusion of separation for crypto foundations is no longer necessary. The new framework encourages founders to relinquish control while providing clearer decentralization standards.

Supporters believe that the encryption foundation can better coordinate the interests of token holders, but in reality, the lack of profit motives results in a lack of clear feedback mechanisms and accountability. In contrast, the corporate structure has an inherent accountability mechanism, constrained by market rules, which can better optimize resource allocation.

The encryption foundation also faces numerous restrictions at the legal and economic levels, making it unable to carry out certain business activities that are beneficial for the development of the network. This structure distorts resource allocation and leads to inefficiency. In contrast, enterprises constrained by the market are better at providing a diversified ecosystem of products and services.

The encryption foundation has also caused significant operational efficiency losses. In order to meet the formal separation requirements, it was necessary to artificially split a team that originally collaborated efficiently, hindering development progress and collaborative efficiency.

Moreover, many cryptocurrency foundations have evolved into centralized entities that control key network permissions, lacking substantive accountability to token holders. This structure increasingly conflicts with emerging regulations that encourage on-chain accountable systems.

Under the new regulatory framework, conventional development companies will become a better vehicle for the continuous construction of the network. Companies can allocate capital more efficiently, attract talent, and respond to the market.

To ensure incentive collaboration, the following tools can be used:

1. The structure of the public welfare company (PBC), balancing profit and public interest.
2. Network Revenue Sharing Mechanism
3. Milestone-based token allocation mechanism
4. Sign a protection clause with the DAO
5. Programmatic Incentive System

Two emerging solutions, DUNA and BORG, provide efficient pathways for implementing the above solutions. DUNA grants legal status to DAOs, while BORG offers on-chain governance tools.

The encryption foundation once led the industry through regulatory winters, but its value has become marginal. The new era requires genuine governance, substantive collaboration, and systematic operation. The encryption industry needs to build a scalable system with real incentives, accountability, and decentralization.