MilkyWay, the liquid staking protocol for Celestia, a public blockchain within the Cosmos ecosystem, has announced its cessation of operations. The Cosmos ecosystem was once a hotbed for venture capital investment, but now no protocol has truly emerged victorious, a stark reminder of the end of an era.
MilkyWay announces permanent closure; DeFi, restaking, and RWA demand falls short of expectations.
The Celestia ecosystem DeFi protocol MilkyWay Protocol has officially announced the initiation of its shutdown process and will permanently cease operations. The team stated that after a lengthy evaluation, they believe it is no longer possible to continue the project while simultaneously ensuring sustainability and community responsibility. Therefore, they have chosen an orderly exit and pledged to complete the process transparently. The MilkyWay team indicated that the protocol will enter a predetermined exit process, with all functions being gradually deactivated starting today. After on-chain settlement and asset return are completed, the protocol will be fully shut down.
From Celestia LST to cross-chain deployments, the demand never materialized.
MilkyWay was initially positioned as the first liquid staking token (LST) protocol in the Celestia ecosystem, and at one point became the largest liquid staking provider in the ecosystem. It has since expanded to ecosystems such as Initia and Babylon.
As the business grows, the team is trying to extend its experience in blockchain security and staking architecture to the restaking domain, and further explore Real Asset Tokenization (RWA), new financial services and neobank products, hoping to find growth momentum in the new market cycle.
However, the team admitted that the market evolution has deviated significantly from initial expectations. MilkyWay originally predicted that the Celestia ecosystem would rapidly see an explosion of DeFi applications driven by technology and narrative, and deployed products such as milkTIA in advance. However, in reality, the overall ecosystem matured much slower than expected, and the related leverage and usage demand have never reached a significant scale.
MilkyWay also achieved remarkable results in the restaking field, with its protocol TVL reaching $250 million at one point, and it completed a full audit and security assumption design. However, the team stated that the restaking market's popularity has cooled down faster than expected, and even though the code is already deployable, they have chosen to postpone its launch to avoid releasing a product lacking long-term viability.
MilkyWay targeted emerging assets such as real estate and agriculture, attempting to provide security through re-collateralized infrastructure. However, after negotiating with relevant institutions and completing the planning, the plan ultimately failed to materialize due to unforeseen external factors.
In addition, the team later shifted its strategy to real-world applications with high frequency and rigid demand, launching WayCard, a payment card product linked to rent and daily consumption. However, due to limited funding, the product failed to complete market validation within a limited time.
MilkyWay has initiated the exit process and is refunding the agreement fees.
According to the announcement, MilkyWay will be shut down in accordance with three principles:
- Using a single on-chain snapshot as the basis for eligibility determination
- The transaction fees are automatically and proportionally distributed in USDC, without requiring user application.
- After the exit period ends, a hard shutdown will be implemented, explicitly terminating all protocol functions.
The protocol states that its main revenue previously came from liquidity staking fees, with 10% retained by the protocol. This shutdown will convert the accumulated protocol revenue into USDC and then proportionally distribute it to eligible MILK token holders based on the snapshot results. MilkyWay completed its final snapshot on January 14, 2026 at 10:00 (UTC), covering on-chain environments including MilkyWay L1, Osmosis, and BSC, and the following entities are included:
- MILK token holders
- MILK Pledgers
- Liquidity Providers (LPs)
- Centralized Exchange (CEX) Wallets
The team stated that they have coordinated with relevant exchanges, which will be responsible for distributing the returned funds to users. Any transfers or position changes after the snapshot is completed will not affect eligibility. On the final closing date, MilkyWay will cease maintenance and operation of all related services, remove management and upgrade permissions, and publish complete allocation information and verification proof. Undistributed tokens (including unreleased airdrop shares, as well as those allocated for team, foundation, and ecosystem purposes) will be completely burned and will no longer enter the market.
In their concluding remarks, the team stated that it was a difficult but responsible decision. Although they were unable to reach the initially envisioned endpoint, they remain proud of the products they have completed, the cross-chain experiments they have undertaken, and the achievements they have made in building the community. They pledged to continue providing transparent support in the final stages to complete the entire exit process.
MilkyWay was initially positioned as a staking protocol for Celestia, with investors including YZi Labs, Polychain, Hack VC, LongHash Ventures, Crypto dot com Capital, Jia Yaoqi, Mustafa Al-Bassam, George Lambeth, Rushi Manche, Kenny Li, Stanford Liu, and Michael Ng. It was once a star protocol, but now it faces closure due to the lack of application explosion, which also symbolizes the end of an era.
Interestingly, protocols founded by individual investors including Jia Yaoqi (AltLayer), Mustafa Al-Bassam (Celestia), Rushi Manche (Movement), Kenny Li (Manta), and Standford Liu (Initia) tend to focus on infrastructure and have not been very successful. The Cosmos ecosystem, to which they belong, was once a hotbed for venture capital investment, yet no protocols have emerged, which is quite regrettable.
This article, "Celestia Liquid Staking Protocol MilkyWay Announces Cessation of Operations, Marking the Official End of the Comos Era?", first appeared on ABMedia, a ABMedia .
