How Web3 Projects Can Achieve Compliant Operations, Promote Community Development, and Ensure Project Success Against the Global Regulatory Background Through Crypto Foundations

Written by: Liu Honglin, Iris

In the world of Web3, the concept of a foundation is often mentioned but not deeply understood. As a core pillar of a project, the foundation not only determines the technical direction but also plays a central role in promoting community development and ecological construction. However, for most startup teams in Web3 projects, the question of "Why do we need to establish a foundation?" remains an unavoidable issue.

Previously, attorney Mankun detailed the important role of crypto foundations in U.S. legal compliance in "Web3 Lawyer: Understanding the Ethereum Foundation 2024 Report, Facing Compliance Challenges in the Trump Era," by combining U.S. regulatory trends. As the industry gradually matures, the global regulatory environment continues to improve, and the role of crypto foundations in Web3 projects is extending from technical support and governance to compliance and ecological protection.

In this article, attorney Mankun will analyze how Web3 projects can achieve compliant operations, promote community development, and ensure project success against the backdrop of global regulation based on the essential significance of foundations.

Governance Limitations of Web3 Projects

The uniqueness of Web3 lies in its decentralized philosophy, which provides broad imaginative space for projects but also brings governance complexity. Compared to traditional enterprises that rely on clear distribution of responsibilities and stable management structures, the governance of Web3 projects needs to find a balance among technological development, community autonomy, and ecological construction, while also facing the competition among multiple stakeholders.

In many early-stage Web3 projects, the independence of governance structures is often a challenging hurdle. Projects rely on the management model of core teams in their early stages, which can accelerate development progress but also easily fall into the "centralized" governance dilemma. For example, when team members change, the project's legal responsibilities and operational direction may face significant risks due to the lack of an independent governance body. Additionally, this model may limit community participation due to highly concentrated decision-making power, preventing the true realization of decentralization.

Conflicts of interest are also common challenges under individual or team management models. When team members are also major holders of project tokens, their decisions may lean towards pursuing short-term benefits while neglecting the project's long-term development goals. Such behavior not only undermines community trust but may also cause irreversible harm to the project's ecosystem.

The establishment of crypto foundations is precisely aimed at solving these governance issues.

Core Functions of Crypto Foundations

How can crypto foundations address the challenges faced by Web3 projects? This requires understanding what services crypto foundations can provide for Web3 projects.

In the Web3 ecosystem, foundations are not only management institutions for projects but also key pillars to ensure decentralization, sustainability, and compliance. From governance to fund management to ecological construction, every function of the foundation is closely centered around promoting the long-term development of the project and the interests of the community. Here are the core functions of foundations in Web3 projects:

1. Decentralized Governance

Decentralization is the soul of Web3, and the foundation is the hub for realizing this concept. Through the governance framework of the foundation, projects can break free from the control of a single interest entity and transfer more decision-making power to the community. Typically, crypto foundations set up multiple teams to address different issues, such as an events team responsible for planning and organizing external activities, a development team responsible for technological innovation and product upgrades, and a community team responsible for operating the global community.

Additionally, crypto foundations usually promote the formation of community consensus through on-chain voting or proposal mechanisms. For example, the Ethereum Foundation has long adopted the EIP (Ethereum Improvement Proposal) process, allowing developers and the community to participate in setting the technical direction. This mechanism not only enhances community participation but also avoids trust crises caused by governance opacity.

At the same time, the foundation also bears the responsibility of resource allocation. For instance, it rationally divides various resources such as development incentives, ecological expansion funds, and community rewards to ensure a balance of interests among all parties. This open and transparent allocation mechanism not only improves resource utilization efficiency but also further solidifies the community's trust in the project.

2. Robust Fund Management

The funding sources for Web3 projects are diverse, ranging from token financing to ecological cooperation, and various funds need to be professionally managed to maximize their value. In this process, crypto foundations act as "financial stewards."

First, crypto foundations allocate resources for key areas such as research and development, marketing, and community building based on the overall project plan. For example, the Polkadot Foundation has established special funds to support the development of cross-chain protocols; the Ethereum Foundation allocated 25.7% of its funds to L1 development in 2023 and 11% to ZK technology.

Second, to cope with the high volatility of the Web3 market, crypto foundations typically reserve a portion of funds as reserves to address risks brought by market changes. This strategy not only enhances the project's risk resistance but also provides greater security for community members and investors.

More importantly, crypto foundations usually disclose their financial status and fund expenditure to the ecosystem on a semi-annual or annual basis, ensuring maximum transparency and increasing trust within the overall ecosystem.

3. Promoting Ecological Construction

The success of Web3 projects relies on a strong ecosystem, and crypto foundations are the core promoters of ecological construction. Crypto foundations connect developers, users, and partners through funding support, technical guidance, and event organization to jointly build a thriving project ecosystem.

Taking the Solana Foundation as an example, it helps developers within the ecosystem create safer and feature-rich projects by providing technical resources and funding. The foundation's support is not only reflected in fund allocation but also includes providing developers with technical tools, multi-signature wallets, and other infrastructure services. This precise support for developers enables rapid implementation of technological innovations within the ecosystem while enhancing user experience.

Another typical case is the NEAR Foundation. Through strategic fund allocation and community activity support, the foundation has attracted global partners and provided developers with open technical stack support. For instance, the NEAR Foundation has promoted the introduction of AI technology, expanding the application scenarios for the ecosystem. These innovative promotion methods not only enhance the technical strength of the ecosystem but also attract more developers and users' attention.

Furthermore, the foundation also hosts events such as hackathons and developer conferences. For example, Ethereum holds Devcon in different regions around the world every year, attracting technical talent and Web3 projects to join ecological construction. These events not only inject new technical capabilities into the project but also provide users with direct opportunities to engage with the project, enhancing trust between both parties.

Compliance Barriers for Web3 Projects

In an increasingly complex global regulatory environment, the legal and compliance issues faced by Web3 projects are becoming more severe. From intellectual property protection to the legality of cross-border transactions, every link can become a potential risk point for project development. Against this backdrop, crypto foundations, with their independent legal entity status and systematic legal support, provide an important compliance barrier for projects.

The most prominent compliance advantage of foundations lies in their independent legal entity status. This status effectively isolates legal responsibilities, ensuring that the interests of team members and community participants are not directly threatened by external lawsuits or regulatory risks. For example, when a project is sued by a third party over intellectual property issues, the foundation can participate in the litigation as an independent entity, concentrating the risk at the organizational level rather than dispersing it among the core development team or community members. This responsibility isolation mechanism not only alleviates the legal burden on project operators but also allows participants to engage in project construction with greater peace of mind.

The legal structure design of the foundation is another core advantage. Currently, Singapore, Switzerland, and Hong Kong have become popular registration locations for crypto foundations. The choice of these regions is not accidental; it is due to the fact that these jurisdictions offer crypto-asset-friendly regulatory policies and tax optimization opportunities. For example, Singapore, with its clear legal framework and trust structure, helps foundations save about 30% in operational costs through tax optimization; Switzerland's "Crypto Valley" enjoys globally recognized crypto asset support policies, providing a broad platform for the foundation's technological research and ecological expansion; while Hong Kong, through its latest virtual asset regulatory policies, creates compliance convenience for foundations operating in Asia. The legal environment in these regions not only ensures the legitimacy of the foundation but also helps projects achieve more efficient resource management through tax and capital flow cost optimization.

Intellectual property protection is also one of the core tasks of the foundation. In Web3 projects, code, trademarks, and brands are key resources for building competitiveness. Through centralized management, foundations can effectively protect the project's technological achievements from misuse. For example, the Ethereum Foundation has registered its trademark "Ethereum" globally to prevent malicious use by other entities. This centralized management model not only protects project assets but also lays a solid foundation for the global promotion of the brand.

Additionally, foundations play an important role in cross-border investment and transactions. The global nature of Web3 projects makes cross-border capital flow and international cooperation the norm, but the regulatory policies for virtual assets vary greatly from country to country. Foundations ensure that every transaction and cooperation complies with local laws by collaborating with professional legal experts. For instance, in the U.S., the foundation team helps projects ensure that token issuance complies with the Securities Act through due diligence; in the EU, the foundation assists projects in complying with the General Data Protection Regulation (GDPR) requirements, ensuring that user data processing meets legal standards.

Finally, foundations further reduce compliance risks through highly transparent operational models. Foundations typically implement strict anti-money laundering (AML) and know your customer (KYC) policies to ensure the legality of fund sources and uses, while also enhancing community trust through regular financial audits and reports. Transparency not only helps projects reduce legal risks but also strengthens the project's credibility in the market.

Summary by Attorney Mankun

The success of Web3 projects relies not only on technological innovation but also on a strong governance structure and compliance guarantees. As independent legal entities, crypto foundations provide a framework for decentralized governance and resolve many complex operational challenges with their unique legal status. From resource allocation to ecological construction, from intellectual property protection to legal risk isolation, foundations play an indispensable role in promoting the sustainable development of projects.

Globally, regions such as Singapore, Switzerland, and the Cayman Islands have long been popular locations for establishing crypto foundations due to their friendly legal environments and efficient policy execution. As Hong Kong's policies regarding virtual assets become increasingly open, its strong financial ecosystem and detailed regulatory guidance are becoming an important choice for Web3 projects in Asia to establish foundations.

Mankun Law Firm has been deeply involved in the Web3 industry for many years and has rich experience in foundation establishment and compliance services. Whether your project aims for global expansion or focuses on local development, the Mankun legal team can provide comprehensive solutions from structural design, fund management to operational support based on your needs. Choosing Mankun Law Firm is not only choosing professionalism and stability but also paving a compliant and developmental path for your project.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。