I. Introduction
In his thought-provoking piece, "The End of the Foundation Era in Crypto," Miles Jennings (a16z crypto) presents a critical view of the traditional foundation model that has long underpinned Web3 ecosystems. He argues that this model - once innovative - is now outdated, inefficient, and no longer fit for purpose.
Among the core issues he identifies are flawed incentive structures, legal rigidity, operational fragmentation, centralized control, and high legal costs. Many projects have indeed encountered these challenges, particularly when working with offshore structures.
However, Jennings' critique, while well-founded, ignores a crucial point: not all foundations are the same.
While the problems he describes are often true in the context of offshore foundations, they do not apply to the more flexible and legally mature Swiss foundation model. Even more so, the Swiss association offers a lean and community-native alternative that is increasingly preferred by DAO-led projects.
This article offers a European perspective on Jennings' critique and outlines why Switzerland is not only still relevant - but leading the way in the next phase of crypto-native legal structuring.
II. Why the Swiss Foundation Fits the Purpose
The Swiss foundation offers a structurally and philosophically different approach - one that is purpose-driven, regulated, transparent, and built for long-term trust.
- Purpose-Bound and Supervised: Swiss
foundations are legally bound to pursue a defined public or
ecosystem purpose, which cannot be altered unilaterally. This
provides long-term clarity and assurance for contributors and
communities. Additionally, Swiss foundations are supervised by
federal authorities, ensuring they operate in compliance with their
mandate and applicable laws, and must prepare audited financial
statements, enhancing transparency and public accountability. This
makes them trustworthy counterparties for developers, token
holders, regulators, and institutional partners.
- Streamlined Execution: Swiss foundations do
not require separation from core teams. Developers, contributors,
and even token holders can be engaged directly through the board,
governance sub-bodies or contractual agreements. There is no
obligation to hire independent directors or incorporate foreign
subsidiaries - making operations both simpler and more agile. In
addition, foundations can even issue digital assets, perform
commercial activities, and license IP.
- Legal and Practical Integration with DAOs:
Foundations in Switzerland can legally engage with DAO
stakeholders, establish advisory councils, and delegate
responsibilities via smart contracts or off-chain processes. While
the board retains ultimate fiduciary responsibility, community
governance can be embedded directly into the decision-making
structure.
- Predictable Costs and Legal Certainty: Swiss foundations are oftenless costly overall than offshore equivalents, especially when considering regulatory clarity, tax certainty, and the avoidance of redundant subsidiary layers. Switzerland also offers 100+ tax treaties and legal tools such as the blocking statute (Art. 271 SCC) to shield entities from unjustified foreign legal demands.
In addition, a deep and mature ecosystem of service providers (such as banks, custodians, law firms, tax advisors, accountants, etc.) is ready to serve Web3 projects, making Switzerland's ecosystem the most sophisticated globally.
In essence, the Swiss foundation model aligns purpose, oversight, execution, and community engagement - making it one of the most balanced structures for Web3 ecosystems today, already widely used since years by globally leading infrastructure projects such as Anoma, Cardano, Cosmos, Dfinity, dYdX, Ethereum, LUKSO, NEAR, Polkadot, Safe, Solana, Tezos, or TON.
III. The Swiss Association: A Lightweight Alternative
For projects that prioritize agility, flat governance, or grassroots participation, the Swiss association offers a simple yet powerful legal vehicle.
- Fast and Simple to Establish: A Swiss
association can be founded in one day, by just two individuals,
with no capital requirement and minimal formality. In addition,
there is no external supervision or mandatory registration (except
if commercially active). This makes the Swiss association real
low-cost compared to other structures or jurisdictions.
- Operationally Capable: Associations can issue
digital assets, manage treasuries, own IP, and contract with
developers - and can spin off subsidiaries (e.g., Swiss or foreign
LLCs) for commercial activity when needed. This allows for scalable
and compliant growth.
- Naturally DAO-Compatible: Swiss associations are member-based, making them highly compatible with DAO structures. Token holders can directly shape statutes, elect representatives, or participate in governance - mirroring on-chain processes with legal form.
Hence, Swiss associations offer a rare combination - the legal clarity of an incorporated entity, with the governance flexibility and lightness of a DAO-native structure. They are ideal for early-stage projects, grant programs, and community-run initiatives, such as Aragon, Badger, Casper, hopr, Linea, or Nillion.
IV. Why Jennings' Critique is Nevertheless True - In the Offshore Context
Jennings' concerns are real - but they are not universal. They primarily reflect the limitations of specific offshore jurisdictions, rather than inherent flaws in the concept of a foundation itself.
- Incentive misalignment is systemic: Offshore
foundations must often appoint independent local directors and
cannot involve core contributors or token holders in formal
decision-making. As a result, the entity often feels disconnected
from the ecosystem it is meant to serve.
- Legal separation leads to operational silos:
In practice, offshore structures often require distinct entities
for the development, token issuance, IP holding, and treasury
functions - creating coordination hurdles and increasing
administrative overhead.
- DAO integration is limited: When Cayman
foundations wrap DAOs, they function as DAO-adjacent entities since
directors retain full legal authority over the foundation and its
assets. While bylaws can require directors to follow governance
votes, token holders cannot issue binding instructions since
directors must approve all outcomes and retain a veto right.
Offshore foundations are, therefore, often legally prohibited from
accepting binding instructions from DAOs. This creates a governance
gap where the community's voice may be informally heard, but
not formally implemented.
- Cost is a serious barrier: A compliant offshore structure typically involves a Cayman foundation plus several subsidiaries (e.g., BVI or Panama), external independent directors, and regulatory opinions - resulting in legal and tax costs that can overwhelm early-stage or resource-constrained projects.
In short, Jennings' criticism is justified in the offshore context - but it does not apply to jurisdictions like Switzerland.
V. Conclusion
Miles Jennings rightly identifies the cracks in the offshore foundation model as it exists today. But rather than abandoning the concept altogether, the Web3 world should ask a more precise question: What kind of foundation - and where?
The offshore model may be nearing the end of its useful life, but the Swiss foundation offers a more credible, regulated, and community-trusted alternative. It aligns legal structure, governance, and efficient tax treatment with long-term ecosystem goals - while maintaining transparency and institutional trust.
For those who prefer an even lighter model, the Swiss association provides a legally sound, flexible, and fully DAO-compatible path forward.
And finally, Switzerland's Web3 ecosystem is very sophisticated overall due to a serious number of service providers such as banks, custodians, law firms, tax advisors, accountants, etc.
The foundation era in crypto isn't over.
It's just maturing - in Switzerland.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
