Lisk proposed discontinuing its DAO on Tuesday in a plan that would burn 100 million LSK from the treasury and transfer approximately 47 million LSK to Lisk Ltd, the company behind the project.
What Is Being Proposed
The proposal, posted to the Lisk Governance Forum at 11:54 UTC, follows the announced shutdown of the Lisk Chain on October 31, 2026.
Four changes are specified. Tokens vested to the DAO treasury for 2027 through 2033, 15 million per year for six years, plus 10 million for 2033, would be burned, reducing total LSK supply from 400 million to 300 million. All LSK vested over 2026 or currently liquid in the treasury, put at roughly 47 million with the exact figure fixed at execution, would move to Lisk Ltd.
Ownership of two Arrakis-managed liquidity vaults would transfer from the DAO Treasury Council to Lisk Ltd. Those vaults hold LSK-ETH liquidity on Uniswap v4 on Ethereum and on Aerodrome on Base, both deployed under earlier DAO votes.
Governance contracts would be updated to pause the DAO, and the Lisk Governance Forum itself would be shut down—including the venue where the proposal is currently posted.
Separately, the staking contract would be changed to remove the penalty on emergency unlock, letting any holder exit immediately. A three-day waiting period before funds unlock remains. The proposal notes staking rewards are guaranteed only until the chain shuts down.
The Two Directions
The burn and the transfer move in opposite directions for token holders.
Burning 100 million LSK removes a quarter of total supply and eliminates future vesting that would have entered circulation between 2027 and 2033. The proposal states that future costs will be funded by the Onchain Foundation rather than by selling treasury LSK, which it presents as removing a recurring source of sell pressure.
The 47 million LSK transfer moves tokens from a community-governed treasury to a private company balance sheet. Lisk describes this as a community-aligned incentive that ties Lisk Ltd’s position to the LSK token. The proposal does not specify lockups, vesting, or disposal restrictions on the transferred tokens.
Why Lisk Says It Is Doing This
The motivation section is unusually direct about what did not work.
Lisk writes that it spent two and a half years bootstrapping an ecosystem after migrating from L1 to L2, aiming for a flywheel in which chain activity would generate value flowing back to the LSK token, funding further incentives. It states that Lisk Chain, like most other L2s, struggled to generate enough revenue to support that loop, and that ecosystem incentives paid in LSK created significant sell pressure and contributed to a decline in the token price.
It then points beyond its own execution, citing a post by Vitalik Buterin as evidence that the original vision of L2s within the Ethereum ecosystem is now in question.
The proposal describes the current trajectory as requiring correction, naming large LSK spending, price decline, operational fragmentation across external stakeholders, and execution of non-core activities.
Lisk has announced a new product, also called Lisk, currently in early access.
What Happens Next
The proposal is at the forum stage. No voting window, quorum threshold, or execution date is stated, and it has not been put to an on-chain vote at the time of writing.
The action plan assigns execution across three bodies. The Lisk Security Council would update the staking contract immediately after passage and handle the contract upgrades required to burn the vested treasury. The Treasury Council would transfer the Arrakis vaults. The Onchain Foundation would sweep the remaining balance of the 2025-2026 vesting wallet after the transfer to Lisk Ltd. completes. Lisk Ltd would shut down the forum.
