Foundations Can't Scale Crypto: But DATs Will

For roughly the past decade, foundations have been the default structure for launching new crypto ecosystems. Born out of necessity, they provided early coordination and funding when regulatory uncertainty and a lack of established frameworks made other options impossible. Many of these foundations have done remarkable work nurturing ecosystems from idea to global scale. Yet, like many systems created under pressure, the model is beginning to show its limits.

At DeFi Development Corp. (Nasdaq: DFDV), we believe the next evolution of foundations is currently underway. Digital Asset Treasuries (DATs) represent a new means for aligning incentives between cryptoasset builders, investors, and participants. Amongst other things, DATs are public, transparent, and profit-driven. They’re inherently structured to fuel ecosystem growth value through performance and results, while foundations were designed to preserve neutrality and drive further decentralization. DATs embrace accountability, competition, and measurable results, all without compromising alignment with the underlying network.

In this blog post, we examine how foundations became the backbone of early blockchain development, why this structure is under pressure, and how DATs provide a modern, market-driven alternative. Readers can expect to understand how and why DATs are set to take the torch from the foundations that came before them, as well as the underlying implications for the respective networks.

A Short History of Foundations

Bitcoin launched in 2009 with no pre-mine, no fundraising, and no formal organization. Its initial survival and success were due to the passion and persistence of a small group of developers, miners, and believers who aligned around a core mission instead of a formal structure. No legal entities, no paid staff, and no treasury; only code, ideology, and coordination through open-source collaboration.

In 2012, the Bitcoin Foundation was established to formalize development and advocacy around the network. But because Bitcoin had no pre-mine or fundraising mechanism, the foundation lacked sustainable funding. It relied primarily on donations and membership fees, inherently limiting its reach and impact. While the Bitcoin Foundation helped pioneer the idea of a coordinating entity for decentralized ecosystems, it never achieved the scale or influence of the later-established foundations.

In 2014, the Ethereum ICO became crypto’s first major capital formation event, raising approximately 31,000 BTC (roughly $18 million at the time) and giving birth to the Ethereum Foundation. This influx of capital enabled the funding of full-time developers, the creation of dedicated marketing and research teams, and the acceleration of protocol development. It was at this point that a blockchain had working capital, and with it came a new problem: where should that capital live, and who should control it?

A traditional venture-backed company was never an option. These projects aimed to become decentralized public goods, not private corporations. At the same time, regulation was unclear and often hostile. The solution was the offshore, non-profit foundation: an entity that could hold assets, pay developers, and coordinate growth while remaining legally distinct from the token itself. Foundations in places like the Cayman Islands, Switzerland, and the British Virgin Islands became the de facto operating system for crypto project governance.

Over time, this structure expanded to launch Layer-1 blockchains, such as Solana. Foundations sponsored hackathons, awarded grants, and funded infrastructure that helped bootstrap their ecosystems. They were indispensable during the bootstrapping phase of the industry, when no other structure could safely coordinate development at scale.

However, as networks have matured and billions of dollars worth of tokens have resided under foundation control, the limitations of this model have begun to become apparent. What worked for nascent networks getting up off the ground no longer suits an industry moving toward institutional adoption, public market scrutiny, and real-world accountability.

Why the Foundation Model Is Showing Its Limits

Although far from perfect, the foundation deserves credit for helping nurture the industry through its earliest and most uncertain years. However, their structure introduces persistent challenges that become increasingly difficult to ignore as networks mature. Consider the following:

1. Misaligned incentives
Foundations are not profit-motivated. Though not always explicitly stated, their goal is to make themselves obsolete as the network becomes more decentralized and widely adopted. Yet human nature has, in some cases, pushed in the opposite direction. As influence and capital grow, few organizations willingly reduce their power. Over time, this tension can lead to bureaucratic inertia, insider enrichment, mission drift, and other adverse consequences.

When incentives drift, ecosystems slow down. Grant capital can become trapped in review cycles, token distributions can lose transparency, and teams can become overly reliant on foundation funding rather than developing sustainable business models. The result is a fragile growth engine that relies on what ultimately becomes a centralized decision-making instead of a market-driven feedback loop.

2. Limited transparency
Despite managing large treasuries, many foundations operate as black boxes. Few disclose detailed financials, headcounts, or decision-making frameworks, which runs counter to the very transparency ethos that blockchains are widely regarded to represent. For token holders, this opacity makes it difficult to evaluate how capital is being deployed or how effectively it supports long-term network growth, inherently limiting token price discovery.

3. Structural inefficiency
Non-profits are not designed for capital efficiency or ROI discipline. While this may seem virtuous in nature, the result can easily become idle reserves, slow grant cycles, and limited accountability. In turn, this reduces impact, particularly as ecosystems scale. The lack of measurable benchmarks can lead to underutilized treasuries and missed opportunities during key growth phases. This is far from malicious and is instead simply the byproduct of a structure optimized for survival in an adversarial regulatory era, not for competitive performance in an open market.

Enter the Digital Asset Treasury (DAT)

A DAT is a publicly traded company that exists to maximize shareholder value while supporting the long-term success of the ecosystem whose assets it holds. DATs achieve this in two primary ways:

• Growing Asset Per Share (APS): accumulating more of the underlying token per outstanding share
  

• Driving ecosystem value: expanding awareness, infrastructure, and use cases that increase the asset’s price and adoption

For years, the regulatory environment made the DAT model arguably illegal. Public companies could not meaningfully hold or manage crypto assets without facing regulatory risk. However, following the election of President Trump in 2025, clarity emerged regarding digital asset custody, accounting, and disclosures. Public-market participation is now not only viable but strategically advantageous. The same forces that once forced projects into offshore foundations now favor transparent, onshore entities like DATs.

Early in their lifecycle, DATs focus on APS growth. For instance, to double Bitcoin (BTC) Per Share, MicroStrategy needs to buy roughly $70B of BTC - no small feat. By contrast, DFDV, focused on accumulating Solana’s native SOL token, could double the SOL Per Share (SPS) with a far smaller and more achievable amount of capital - roughly $500M as of publication.

As DATs scale, their influence expands. Like MicroStrategy with BTC, they evolve from being passive holders to active ecosystem advocates, amplifying awareness, strengthening fundamentals, and creating flywheels that benefit both shareholders and the broader network. This incentive structure mirrors how healthy markets work: success breeds alignment, not bureaucracy.

Radical Transparency and Onchain Accountability

Unlike foundations, DATs are held to public-market standards. They publish audited financial statements, quarterly filings, and earnings calls, ensuring that shareholders and ecosystem participants can track performance in real-time.

Transparency is not a marketing slogan; it is a structural advantage. Public disclosure requirements inherently yield accountability that private foundations cannot match. For instance, investors can assess treasury efficiency, yield performance, and governance decisions with real data. For token ecosystems, this visibility builds trust and attracts developers, users, and investors. Not only that, but it also lowers the perceived risk of long-term engagement.

At DFDV, we take it a step further by offering near real-time transparency into our onchain treasury on our website. This combines the openness of blockchain with the rigor of public-market reporting, creating a new standard for institutional accountability in crypto.

DATs are also yield-oriented by design. Treasury capital is not meant to sit idle. It is deployed through staking, validator operations, and other onchain strategies that are aimed at growing NAV per share. The result? A compounding model that benefits both shareholders and the underlying network. Yield, transparency, and alignment reinforce one another, creating a cycle of sustainable ecosystem growth that is better suited to fuel the mass adoption of cryptoassets and their respective network.

Foundations vs. DATs

When put side by side, the flaws of foundations and the strengths of DATs are apparent. Consider the following:

This comparison highlights a simple truth: foundations and DATs are structured for entirely different outcomes. Foundations were established to preserve neutrality during crypto’s initial experimentation phase, while DATs are designed to operate under market discipline, driving networks to the limelight. One relies on ideals; the other depends on incentives.

DATs and Foundations: Complementary, Not Adversarial

It is worth mentioning that foundations serve a meaningful purpose and should not be dismissed entirely; they’re crucial in the early formation of ecosystems, particularly in grant distribution, research, and protocol governance. However, once a network reaches scale, a public, for-profit entity can step in to complement the foundation’s work and focus on areas where meaningful progress is now most needed: performance, growth, and capital efficiency.

The healthiest ecosystems will not replace foundations; they will balance them. Foundations remain best positioned for early-stage coordination, grants, and technical stewardship, while DATs can focus on market engagement, yield generation, and long-term compounding. In practice, this means foundations can retain mission alignment while DATs help expand liquidity, awareness, and institutional adoption. Each strengthens the other.

Where foundations provide coordination, DATs provide momentum. Where foundations preserve neutrality, DATs reward execution. Together, the two structures can form a synergistic system that balances ideological decentralization with real-world accountability and execution.

The Future of Ecosystem Growth

As regulatory clarity improves and global governments embrace digital assets, the foundation model is naturally giving way to more transparent and performance-driven structures. The DAT model is that next step, a model built for open markets, measurable progress, and long-term alignment with the ecosystems it serves.

At DFDV, we view this transition not as a threat to foundations but merely as an evolution of them. The next generation of blockchain growth will come from collaboration between mission-driven foundations and market-driven DATs, each amplifying the other’s strengths.

As capital markets converge with on-chain networks, the entities that thrive will be those combining transparency, accountability, and aligned incentives. DATs offer both investors and ecosystems a structure for sustainable, compounding growth - a bridge between crypto’s ideals and traditional finance’s discipline. The future belongs to transparent, aligned, and accountable entities. The next chapter of crypto adoption rests in the hands of DATs.

_{Disclaimer: This is for informational purposes only and reflects publicly announced developments, milestones, and media coverage related to DeFi Development Corp. (“the Company”). The information contained herein does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor should it be relied upon as investment advice or a recommendation regarding any securities. Certain statements in this post may constitute “forward-looking statements” within the meaning of applicable securities laws. These statements are based on current expectations and assumptions and involve risks and uncertainties that could cause actual results or events to differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of publication. DeFi Development Corp. undertakes no obligation to update any forward-looking statements, except as required by law. All information is accurate as of the date posted and is subject to change without notice.}