This article outlines why the momentum around decentralised decision making in DAOs and Cayman Foundations has shifted, and what the outlook looks like from here.
A few years ago, DAOs and Cayman foundation companies were everywhere. Web3 was booming, everyone had a governance model and foundation companies quickly became the structuring vehicle of choice. The narrative was decentralisation. The promise was community led decision making at scale.
Then the markets turned.
Between 2021 and 2023, many DAOs were built on optimism and rising token prices. Treasuries were strong, participation was high, and governance looked active, but as valuations fell and liquidity tightened, the cracks became visible. Token voting rarely delivered meaningful engagement. Participation dropped. Decision making slowed. In many cases, governance often recentralised around a core team.
At the same time, structures that were put in place at the height of the cycle started to appear heavy. Some projects found themselves paying significant annual costs for boards, administration and advisory layers that didn’t reflect how the organisation actually operated in practice. The foundation company was not the issue. The mismatch between structure and reality was.
What we saw was an industry moving very quickly. In that environment, legal wrappers were sometimes used as shorthand for credibility. A Cayman foundation company is not decentralisation in itself. It is a legal vehicle. It provides limited liability, legal personality and a framework for governance. Whether that governance is meaningful depends entirely on how it is designed and implemented.
As the noise has faded, the work has improved.
The structures that remain tend to be leaner and more intentional. Governance is clearer. Treasury oversight is tighter. Boards are appointed because they add value, not simply because it looks good in a pitch deck. Teams are asking harder questions about cost, accountability and long-term sustainability.
There is still a place for Cayman foundation companies in Web3. They are flexible, well understood and capable of supporting complex token-based ecosystems. But they work best when they are built around genuine operational needs rather than narrative momentum.
The market today is quieter, and that is not a bad thing. It leaves space for more disciplined structuring, better governance and more realistic expectations about what decentralisation can and cannot achieve.
The hype cycle has passed. What remains is more serious work.
If you have a foundation company that needs a rethink, we would be happy to discuss.