Written by: Glendon, Techub News
As global market attention gradually shifts towards cryptocurrency, another key area in the crypto industry has experienced a significant upheaval.
Last night, the DAO governance sector was shaken by a news announcement: Tally, a platform providing core governance infrastructure such as on-chain voting and delegation for over 500 top DAOs like Uniswap, Arbitrum, and ENS, announced that it would officially shut down after nearly six years of operation.
Surprisingly, just earlier this February, Tally had publicly stated its intention to launch an ICO, planning to document the entire process publicly over the next 60 days, and had built an ICO fundraising platform based on the Uniswap CCA mechanism to help teams of various sizes raise capital. However, within just a month, the decision-making shift from preparing to "set sail" to "sinking" has caught many off guard. What exactly happened behind the scenes that led to Tally's rapid transformation?
In an open letter released by Tally, CEO Dennison Bertram revealed the direct reason for Tally's closure. This reason also reflects the deep-seated dilemmas currently facing the DAO governance field, like a mirror.
Development History of Tally
Before analyzing the reasons for Tally's closure, let's briefly review the development history of Tally.
Tally was co-founded by Dennison Bertram (CEO) and Rafael Solari (CTO) as a leading platform providing on-chain governance infrastructure for decentralized autonomous organizations (DAOs). Its core mission is to lower the participation threshold for DAOs and enhance governance efficiency and transparency.
Since 2021, Tally has gradually become a mainstream DAO governance tool, referred to by the community as the "DAO governance dashboard." It provides users with intuitive and convenient features for on-chain voting, proposal creation, delegation management, and treasury monitoring. Subsequently, Tally continuously expanded its business boundaries, gradually evolving into a full-cycle on-chain organizational operating system covering token issuance, fundraising, scaling, and staking incentives. Its platform serves over 500 well-known DAOs, including Arbitrum, Optimism, ENS, Uniswap, AAVE, ZKsync, and Wormhole, and at one point became one of the most widely used governance tool stacks in the Web3 world.
Looking back at Tally's development journey, several key milestones cannot be overlooked:
- 2021-2022: Tally's platform influence expands, raising $7.5 million through two rounds of financing. During this period, it was known by the community as the "DAO governance dashboard," supporting on-chain voting and delegation features;
- September 2023: Tally launched on the zkSync Era mainnet, allowing protocols, projects, and public goods on zkSync Era to create and operate DAOs, thus extending support to the zero-knowledge proof ecosystem;
- April 2024: Tally and Wormhole, ScopeLift jointly established the multi-chain governance system MultiGov, supporting DAO usage on Solana, Ethereum mainnet, and EVM L2, breaking barriers between different blockchains;
- June 2024: Tally launched the Tally Protocol, which releases the economic potential of governance tokens by providing liquidity for governance staking and re-staking, and optimizes the distribution of voting rights to bring economic security back to blockchain protocols, offering innovative solutions for the economic governance of DAOs;
- April 2025: Tally completed $8 million in Series A financing, led by Appworks and Blockchain Capital, with participation from BitGo, bringing total financing to $15.5 million;
- February 2026: Tally planned to conduct an ICO and built an ICO fundraising platform based on the Uniswap CCA mechanism.
As of the time of writing, Tally's official metrics show that the platform has transferred a value exceeding $1 billion, generated over 7000 proposals, and recorded over 270,000 token claims. Moreover, in the open letter, Dennison Bertra emphasized that throughout the company's life cycle, the systems it assisted in operating have protected protocols worth over $80 billion, with over one million users having used the site, and tens of millions of token holder addresses participating in governance through the platform.
Based on the above data, Dennison Bertra believes that Tally has proven that decentralized governance can operate on a large scale. It is puzzling, then, why Tally would choose to cease operations?
Dreams of the "Infinite Garden" Shattered, Business Model Unsustainable
Regarding the direct reason for Tally's closure, Dennison Bertra succinctly summarized in the open letter: Currently, no decentralized protocol governance tool has emerged supported by venture capital firms, and the product market fit in the crypto industry mainly focuses on payments and speculation.
This situation is a reflection of the real challenges facing the DAO industry, specifically the collapse of the "Ethereum Infinite Garden" hypothesis.
Once upon a time, the crypto industry optimistically believed that the Ethereum ecosystem would nurture countless innovative DAO projects, including thousands of decentralized protocols, millions of active participants, and a robust governance system operating at scale, thereby creating a flourishing "infinite garden" (a diversified ecosystem composed of protocols and communities, necessitating complex coordination and governance infrastructure). However, the reality is that industry resources are increasingly concentrated among a few leading protocols, forming a Matthew effect where the strong get stronger. Leading DAOs like Uniswap, Aave, and Arbitrum account for the vast majority of governance demand, while mid-sized and smaller DAOs, due to lack of funds and governance motivation, exhibit extremely weak demand for professional governance tools.
In short, the crypto market is far from reaching maturity. Practitioners initially envisioned building a rich ecosystem consisting of consumer applications, protocol communities, and governance organizations, but this vision has not materialized. Under these circumstances, Tally has struggled to build a viable business model around this concept, making its development path arduous.
At the same time, it is worth noting that amidst the current complex and severe situation, Tally and the entire crypto industry are deeply mired in a talent drain. In recent years, the explosive growth of the artificial intelligence industry has attracted a large number of top technical talents. In contrast, the crypto industry is facing escalating issues of talent loss. It is essential to note that the crypto industry requires continuous investment of substantial human resources for product development and technology iteration to meet the continuously changing market demands. However, under the allure of high salaries in the AI industry, many core technical talents are switching careers, leading to a severe impact on the innovation capabilities and business models within the crypto industry.
Dennison Bertra bluntly stated: "AI has become the new narrative for the future, and its narrative scope is broader and more grand than that of cryptocurrency." Although he still has confidence in the crypto industry, he no longer agrees with the assertion that the industry is still in its early stages.
Sudden Shift in Regulatory Winds, Governance Demand Transitions from "Essential" to "Optional"
In addition to the aforementioned factors, in coverage by CoinDesk, Dennison Bertram emphasized that the rise and fall of Tally is closely linked to the dramatic fluctuations in U.S. crypto regulatory policies. He stated that during the Gary Gensler era, the U.S. Securities and Exchange Commission (SEC) took a harsher stance on determining the securities attributes of crypto tokens. Many projects sought to avoid legal risks by undergoing a decentralized transformation through a DAO structure to reduce the risk of their tokens being classified as securities. During this phase, DAO governance tools became an "essential need" for project compliance. Tally quickly became an industry benchmark, attracting top protocols like Uniswap and Arbitrum due to its stable on-chain voting system, delegation management functionality, and deep integration with mainstream smart contracts like OpenZeppelin Governor.
However, as the regulatory stance of the U.S. government has gradually shifted towards relaxation, compliance pressures on the crypto industry have significantly eased. For example, in the crypto asset regulatory "safe harbor" document released by the SEC yesterday, it clearly noted that four types of crypto assets do not qualify as securities, encompassing digital goods, digital collectibles, digital tools, and payment stablecoins as defined by the GENIUS Act. Furthermore, within the explanatory documentation on crypto assets, it explicitly listed examples like SOL, HBAR, LINK, and ADA as 16 types of digital goods, indicating that these assets do not fall within the securities category.
The openness of regulatory policies has allowed many projects to realize that decentralized governance is no longer an essential means of avoiding regulation and may instead become a burden for project development due to issues such as decision-making inefficiency and high governance costs. This fundamental shift in the demand side has directly led to the substantial reduction of market space for governance tools like Tally. Many teams have chosen not to pay for governance tools to reduce costs, which has facilitated the arrival of Tally's "doom." Thus, Tally's cessation of operations seems to have become inevitable.
What Impact Will Tally's Closure Have on the DAO Community?
Tally plans to gradually cease operations at the end of the month. Its closure will undoubtedly have far-reaching and multi-faceted impacts on the DAO community, not only exposing the current vulnerabilities of the decentralized governance ecosystem but also accelerating the reflection and restructuring process of the industry.
On one hand, Tally has provided core functions such as on-chain voting, proposal management, delegation systems, and treasury monitoring for over 500 DAOs, serving as the "operating system" for the daily governance of top protocols like Uniswap, Arbitrum, and ENS. Its sudden closure means that these organizations face pressure to migrate their governance tools in the short term. Although on-chain data is immutable and proposal records still exist, a lack of a stable and user-friendly front-end interface will significantly increase the threshold for ordinary members to participate in governance, potentially leading to a further decline in voting participation rates and exacerbating the problem of "governance apathy."
It is important to note that DAO governance already suffers from low participation, slow decision-making speed, and the issue of a small number of active voters controlling systems worth billions of dollars. Following Tally's shutdown, some DAOs will urgently need to find alternative solutions or rebuild processes, inevitably increasing operational costs and the likelihood of errors, resulting in "short-term pain."
On the other hand, this incident may raise community doubts regarding the sustainability of DAO governance tools. The fall of Tally, as an industry benchmark, sends a strong signal to the entire Web3 community: even the most successful infrastructure projects may struggle to survive due to changes in the external environment. This has shaken the DAO community's trust in third-party governance tools. Furthermore, Tally's closure also reveals the fundamental dilemma surrounding the business model of DAO governance tools. Despite serving hundreds of protocols, Tally has still not found a sustainable profit path.
However, in the long run, crises often harbor opportunities. Although Tally's closure casts a shadow over the DAO governance industry, it does not mark the end of DAO governance. This incident may serve as a catalyst for the DAO community to accelerate technological independence and ecological restructuring. It could prompt the community to place a greater emphasis on the decentralized deployment of governance front-ends or for the industry to begin exploring new forms of governance tools. For instance, governance assistants combined with AI are emerging, capable of automatically summarizing proposals, analyzing voting trends, and reminding users of critical timelines, thus lowering the barriers for voters' participation.
Additionally, changes in the regulatory environment may bring new hope for DAO governance. If future regulatory bodies can formulate clearer and more reasonable frameworks for crypto regulation, clarifying the legal status and governance boundaries of DAOs, it will help eliminate market uncertainty and promote the healthy development of the DAO industry. At that point, DAO governance tools may also see new development opportunities.
Conclusion
The rise and fall of Tally mirrors the complete cycle of DAO governance from boom to calm. Its "curtain call" is also an important milestone in the development process of the DAO governance industry. It highlights the multiple challenges the industry faces in areas such as regulation, market, and talent, and prompts the industry to delve deeper into the future of DAO governance.
Perhaps Tally's departure is not the end, but rather a starting point for DAO governance to evolve towards a more mature stage. In this era full of uncertainties, only through continuous innovation and adaptation to change can new dawns be found in the winter, propelling DAO governance towards a more mature future.
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