Haciyev Reşit 
A notable development has taken place in the cryptocurrency market. MilkyWay Protocol, which was listed on major exchanges, announced that it has decided to gradually wind down its operations and completely shut down the protocol. In the statement shared by the project team, it was noted that the long-anticipated level of user interest and ecosystem adoption failed to materialize. The developers emphasized that challenging market conditions and the slowdown in DeFi growth also played a role in this decision, stating that under the current circumstances, sustaining the project was no longer feasible.
Why Is MilkyWay Protocol Shutting Down?
According to the MilkyWay team, the lack of expected demand in the decentralized finance (DeFi) space and the slow adoption of the developed products were the key factors behind the shutdown decision. The team stated that the market matured more slowly than anticipated and that user engagement remained limited. Additionally, the delayed launch of the WayCard product—originally planned to ease funding pressure—negatively impacted the project’s sustainability and accelerated the shutdown process.
MilkyWay initially launched as the first liquid staking token (LST) developed for Celestia, aiming to become a pioneer in this field. Over time, the project expanded into the Initia and Babylon ecosystems and experimented with various initiatives such as restaking, real-world asset (RWA) tokenization, and neobank-style financial products to support ecosystem growth. However, the team acknowledged that these initiatives failed to generate the expected impact and that planned partnerships could not be realized.
The team also explained that the DeFi ecosystem matured more slowly than expected and that interest in restaking weakened in a short period of time. On the RWA side, planned collaborations could not be implemented due to unforeseen circumstances. The WayCard product, which focused on daily spending and rent payments, also failed to achieve product–market fit due to a limited financial runway.
“We did not see the level of adoption we expected in DeFi. Most of our products lagged behind the pace at which the market matured,” the team stated.
Shutdown Process and MILK Token Distribution
As part of the shutdown process, all protocol features will be disabled and the system will be fully closed after a specified date. MilkyWay announced that protocol revenues would be returned to users. Revenues generated from liquid staking fees—of which the protocol retained a 10% share—will be converted into USDC and distributed proportionally to MILK token holders.
A blockchain snapshot was taken on January 14, 2026, at 10:00 (UTC). The snapshot covers MilkyWay L1, BSC, and Osmosis networks, including stakers, liquidity providers, and MILK tokens held on exchanges. The USDC distribution will be carried out automatically, and users will not need to submit any claims. MilkyWay also announced that all undistributed tokens allocated to the team, foundation, community, and ecosystem will be burned and will never enter circulation. This move aims to clarify token supply and ensure transparency for remaining investors during the shutdown process. Following the announcement, selling pressure on the MILK token increased. The token lost approximately 6% in the last 24 hours, while its monthly decline reached 42%.
Evaluation
MilkyWay Protocol’s shutdown decision once again highlights how critical sustainability and real user adoption are for DeFi projects. Insufficient demand, delayed financial solutions, and limited revenue models can make it difficult for even technically strong projects to survive in the long term. This development underscores that in the DeFi ecosystem, not only innovative ideas but also proper timing and strong product–market fit are essential for long-term success.
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