MilkyWay Protocol Announces Permanent Shutdown and Wind-Down Plan

MilkyWay Protocol Officially Enters Final Phase

(Source: milkyway.zone)

The MilkyWay Protocol team has announced the official start of wind-down operations and will permanently cease all protocol activity. The team described this as a difficult but necessary decision and extended sincere thanks to all users, contributors, and supporters. The community’s involvement enabled MilkyWay to reach several key milestones throughout its development.

Project Origins: From Celestia LST to Cross-Ecosystem Expansion

MilkyWay was originally positioned as the first LST (Liquid Staking Token) in the Celestia ecosystem, achieving product-market fit and briefly becoming the largest liquid staking provider in that ecosystem. The team later expanded its expertise to Initia and Babylon, broadening the product’s reach.

Beyond liquid staking, MilkyWay sought to leverage its strengths in blockchain security and mechanism design for additional use cases, and began developing restaking as its next growth focus.

Market Reality: DeFi Adoption Slower Than Expected

The team acknowledged that, in the project’s early days, it expected Celestia’s technological innovation and growing market attention to quickly drive a surge in DeFi activity. MilkyWay deployed its products ahead of schedule in anticipation of demand. However, actual development lagged behind expectations. The DeFi ecosystem matured slowly, and market demand did not materialize as quickly as hoped. This led the team to reassess its strategy and refocus on immediate, practical utility.

Restaking Boom Subsides, Decision to Pause

During the initial restaking phase, MilkyWay seized market opportunities, completed system design, and reached approximately $250 million in TVL. All security assumptions were audited and the system was ready for launch. However, as market sentiment shifted, restaking’s popularity declined faster than expected. Although the code was ready, the team opted to delay the launch to avoid introducing a product without sustainable long-term prospects.

RWA Exploration Stalled, Plans Not Implemented

In early 2025, the RWA (Real-World Assets) sector saw rapid growth. MilkyWay attempted to adapt its restaking architecture into a security mechanism for tokenizing real-world assets, focusing on emerging markets such as real estate and agriculture. The team maintained ongoing discussions with relevant institutions and developed a comprehensive launch plan. However, unforeseen events forced the initiative to be canceled before execution, preventing further business progress.

WayCard Launch Timing Constrained by Funding Runway

After a strategic pivot, MilkyWay focused on high-frequency, essential crypto payment applications, launching the WayCard product for rent and daily expenses. The goal was to address real-world usage scenarios. However, the limited funding runway prevented the team from completing product-market validation within the available time and resources, which became a key factor in the decision to end operations.

Clear, Transparent, and Irreversible Wind-Down Principles

MilkyWay’s wind-down process will follow three core principles:

• Single snapshot, clear eligibility: All final allocation eligibility is determined by a one-time on-chain snapshot.
• Automatic proportional distribution: Eligible users will automatically receive USDC, with no application required.
• Complete shutdown and explicit exit path: The protocol will permanently cease operations after the wind-down period.

Protocol Fee Refund Mechanism Explained

MilkyWay’s main revenue came from liquid staking fees, of which 10% was retained by the protocol. During the shutdown process, these accumulated earnings will be proportionally refunded to eligible MILK token holders in USDC.

• Source of assets: Consolidation and exchange of all historically accumulated fees (including TIA, BABY, INIT, etc.)
• Calculation method: Proportional distribution based on holdings and computable positions at the time of the snapshot
• Distribution: Fully automated, with no claim interface or manual action required

The team will release the snapshot dataset, eligibility criteria, distribution method, and final figures for community verification.

Snapshot Completed, Eligibility No Longer Changes

The final snapshot was taken on January 14, 2026, at 10:00 (UTC), covering all MILK circulation and usage scenarios on MilkyWay L1, BSC, and Osmosis.

Snapshot targets include:

• MILK token holders
• Stakers and LP participants
• Decentralized exchange positions
• Centralized exchange custody wallets

Any transfers or actions after the snapshot do not affect allocation eligibility.

User Actions During Wind-Down Period

Users holding MILK can manage their positions via Osmosis, PancakeSwap, or supported centralized exchanges and will automatically participate in fee distribution without additional action. Liquid staking and restaking functions have ceased; all positions will be automatically unbonded or instantly withdrawn per existing mechanisms. Liquidity pools are expected to remain available for exit after the wind-down window.

To learn more about Web3, click to register: https://www.gate.com/

Summary

Before the final shutdown date, MilkyWay will complete the following: terminate protocol and related service maintenance, remove management and upgrade permissions, disclose final allocation verification data, and process MILK supply according to final accounting results, including necessary token burns.