MilkyWay Protocol宣布永久关闭！Celestia最大LST项目为何失败？

Having served as the first and largest liquidity staking solution in the Celestia ecosystem, MilkyWay Protocol officially announced in January 2026 that it will be permanently shutting down and entering liquidation.

The project’s TVL once reached $250 million and successfully expanded to Initia and Babylon networks, but ultimately chose to exit gracefully due to the inability to find sustainable product-market fit. According to its shutdown plan, the team completed a snapshot at 10:00 AM UTC on January 14 and will proportionally return the accumulated protocol fees in USDC to MILK token holders. MilkyWay’s failure is not an isolated case; it profoundly reveals that in the rapidly iterating crypto market, even technically sound and previously successful projects can struggle to survive due to shifts in industry trends, market demand falling short of expectations, or operational funding running out—serving as a warning to entrepreneurs and investors in the entire DeFi space.

Why is MilkyWay Protocol closing? The collapse background of leading LST projects in the Celestia ecosystem

In the crypto world, the rise and fall of projects are as common as day and night. But when a project once at the top of its track announces closure, the ripple effects and reflections are especially profound. Early 2026, the DeFi sector was hit with such a major news: the flagship liquidity staking protocol of the Celestia ecosystem, MilkyWay Protocol, published an open letter titled “End and Permanent Closure” on its official website, officially initiating its orderly liquidation. The tone of the letter is heavy and candid, beginning with gratitude to the community, then elaborating on the reasons for closure, the steps involved, and the handling of user assets.

For investors familiar with modular blockchains and liquidity staking, MilkyWay’s name is well known. It was not only the first liquidity staking token solution on Celestia but also, leveraging its first-mover advantage and technical strength, became the largest LST provider in that ecosystem. Its issued milkTIA was the preferred certificate for many users to participate in Celestia staking while earning DeFi yields. At its peak, the protocol’s total value locked (TVL) reached $250 million—an impressive figure. Later, the team demonstrated strong expansion capabilities, successfully extending services to other emerging modular blockchains like Initia and Babylon, showcasing cross-chain ambitions.

Therefore, its sudden exit is more than just a project failure; it is a microcosm reflecting the common difficulties faced by DeFi projects attempting complex financial Lego constructions and multi-sector breakthroughs amid the current crypto bull-bear cycle shifts and market hot spots. While the market mourns, a more rational analysis is needed: what caused this “sudden death”? How will user assets be protected? And what lessons can we learn from this?

MilkyWay shutdown plan details: snapshot timing, fee refunds, and user asset arrangements

When facing project closure, the most pressing concern for users is “What about my assets?” To address this, the MilkyWay Protocol team designed a clear and transparent shutdown roadmap centered around three principles: a single on-chain snapshot for eligibility verification, automatic proportional distribution (no manual claiming needed), and a definitive hard shutdown providing clear exit paths. This plan demonstrates the project team’s sense of responsibility in the final stage, aiming to minimize chaos and protect user interests.

First, all asset refunds are based on a one-time on-chain snapshot. This snapshot was completed at 10:00 AM UTC on January 14, 2026, covering all major blockchains holding MILK tokens, including MilkyWay’s own Layer 1, Binance Smart Chain, and Osmosis. The snapshot includes holders of MILK, stakers, and users providing liquidity on decentralized exchanges. A key detail is that for users who stored MILK on mainstream CEXs, the team stated they coordinated with the exchanges, and the exchange-controlled wallets were included in the snapshot; subsequent distribution will be handled by the exchanges. This means that any transfers or transactions after the snapshot time will not affect users’ eligibility for refunds.

Second, the accumulated protocol fees will be refunded. This is the most concerned part of MilkyWay’s shutdown plan and a responsible move towards token holders. According to the announcement, during its operation, the protocol earned fees from liquidity staking services, with 10% retained by the protocol itself. Now, the team has decided to convert all these earned but undistributed fees into USDC and distribute them proportionally to eligible MILK holders in the snapshot. The distribution will be automatic; users do not need to claim via any interface. To ensure transparency, the team commits to publishing the complete snapshot data, eligibility criteria, distribution methodology, and the final total amount for community verification.

MilkyWay Protocol Shutdown Timeline: TVL Peak, Snapshot Rules, and Key Data Overview

Final snapshot time: 2026-01-14, 10:00 UTC

Historical TVL peak: $250 million (mainly during re-staking exploration phase)

Fee refund method: Fully converted to USDC and automatically distributed

Assets covered: MILK holders, stakers, LP providers (across MilkyWay L1, BSC, Osmosis)

Key operational statuses:

• Liquidity staking: Immediately halted; existing positions will be automatically unstaked.
• Re-staking: No lock-up period; can be unbound and withdrawn immediately.
• Liquidity pools: Pools on DEXs like Osmosis and PancakeSwap will continue to operate for some time to allow users to exit.

Finally, the handling of various positions: For users holding MILK tokens, besides waiting for USDC dividends, they can also sell on supported DEXs or major CEXs. Since the project is confirmed to close, MILK tokens may face significant selling pressure and potential devaluation. Rational choice may be to sell on DEXs (like Osmosis, PancakeSwap) or CEXs with sufficient liquidity, after assessing market conditions. This involves a trade-off between timing and price.

For liquidity staking users holding derivatives like milkTIA, the options are clearer. Since the protocol has stopped functions, your positions are in the process of automatic unstaking. You can choose to wait until the full unbonding period (depending on underlying chain rules) ends, at which point you will receive back the original assets like TIA, INIT. The team also promises to establish centralized liquidity pools on Osmosis and other DEXs to help smooth out redemption price impacts. Alternatively, if you prefer not to wait, you can immediately sell your LST on the market, though this may involve a discount due to market anticipation of redemption pressure.

For users involved in re-staking and liquidity mining, the situation is relatively simple. Re-staking positions without lock-up periods can be unbound and withdrawn immediately via the protocol interface, transferring assets back to personal wallets. For those providing liquidity on Osmosis or similar platforms, the pools are expected to continue running for some time; you should withdraw liquidity promptly and revert assets to single tokens for subsequent handling. Throughout, always consult official channels (official website, GitHub) for updates, and beware of third-party links or services claiming to “speed up processing” or “assist with claims” to avoid scams.

Industry reflections after MilkyWay’s collapse: three lessons for projects, investors, and ecosystems

MilkyWay Protocol’s failure, though an individual event, acts like a mirror reflecting certain structural challenges in current DeFi and the broader crypto startup scene. Its experience offers at least three valuable lessons for builders, investors, and the community.

First, technical robustness does not guarantee business success; timing and sustainable demand are crucial. MilkyWay’s team excelled technically: they were the first LST in Celestia, reached top TVL, expanded cross-chain, and developed a re-staking system that passed audits. Yet, all these technical achievements did not translate into long-term commercial success. The core reason was reliance on “anticipated demand,” which proved to be an illusion. This warns entrepreneurs: before investing heavily in technology, validate market needs with smaller, flexible experiments. In sectors relying on ecosystem development, “building the highway for future demand” is a high-risk strategy.

Second, chasing hot trends is a double-edged sword that can drain innovation teams’ resources. From LST to re-staking, RWA, and finally to real-world payment cards, MilkyWay’s exploration trajectory mirrors DeFi hot topics over the past two years. The team showed strong learning and adaptation, which is commendable. But frequent, fundamental sector shifts also consume the team’s most valuable resources: time, focus, and limited funds. When each new story demands market cultivation while market patience and cash flow rapidly diminish, tragedy ensues. This reminds entrepreneurs to balance embracing change with maintaining core strengths and finding stable footholds, avoiding losing direction in the wave of trends.

Third, responsible failure is a necessary step toward industry maturity. Despite the unfortunate ending, MilkyWay’s transparent and responsible approach to closure—detailed reasons, clear exit plans, fee refunds, token destruction, and open data—maximized user protection and community trust. Many projects in crypto history have suffered from project teams fleeing with funds or neglecting users. MilkyWay’s responsible exit demonstrates that even in failure, a project can end with dignity and accountability. Cultivating this culture is vital for attracting broader traditional users and capital into crypto. Its graceful exit, while taking a product away, may leave a valuable legacy on “how to end well.”