Researcher
Today, Celo announced the integration of Celo Foundation and cLabs. This follows Uniswap's December 2025 decision to transfer the foundation's role to Labs and the DAO through ‘UNIfication’.
Until now, separating the non-profit foundation responsible for token issuance from the for-profit company (Labs) handling actual development has been the standard organizational structure in the crypto industry. This structure stood on two justifications:
Decentralization: The logic that a non-profit foundation managing tokens and ecosystem resources must maintain distance from profit-driven developers to enable neutral governance.
Regulatory Avoidance: The SEC's Howey Test considers "expectation of profits from the managerial efforts of others" as a key criterion for securities classification. Placing a foundation as an intermediary could dilute the direct link between tokens and developers.
However, both justifications were largely fictional for most projects. The same team effectively controlled both the foundation and Labs, and foundation boards were often populated by external lawyers holding multiple foundation directorships while collecting fees.
Miles Jennings, legal counsel at a16z crypto, wrote an article on the inefficiency of the foundation-labs separation structure back in February 2025, a year ago. Comparing his points with the rationale Uniswap and Celo have presented for their foundation-labs integrations makes the limitations of the current separation structure even clearer.
Operational Efficiency: Celo emphasized "one unified operating plan, one set of priorities, one leadership structure." When foundation and Labs are separated, teams get bogged down by unnecessary questions like "can we use the same Slack channel?" or "is it okay to share the roadmap?" Artificial organizational barriers impede collaboration, delay decision-making, and ultimately degrade product quality.
Incentive Alignment: Alongside the integration, Uniswap activated the protocol fee switch and linked revenues to UNI token buybacks and burns. Setting Labs' frontend fees to zero and focusing solely on protocol growth is a declaration to directly connect company interests with token holder interests. Under the foundation structure, foundation employees are compensated only in tokens and cash, providing merely short-term motivation tied to public market volatility, whereas company employees have the additional long-term incentive of equity.
Changing Regulatory Environment: SEC Chairman Paul Atkins declared through "Project Crypto" that "the era of offshore foundation establishment, decentralization theater, and confusion over securities status is over." The SEC's new "control-based" framework allows developers to simply prove "absence of control over the network" without hiding their activities. The era when separation was necessary for regulatory avoidance has come to an end. Of course, regulatory uncertainty outside the U.S., tax benefits of Swiss and Cayman foundations, and concerns over conflicts of interest between token holders and company shareholders remain valid, and integration is not a universally applicable solution for all projects.
However, simply merging the two organizations does not resolve these issues. Projects that genuinely aspire to decentralization must address the question of where to place the decentralized governance functions that the foundation previously handled.
Uniswap chose a complex structure called DUNA (Decentralized Unincorporated Nonprofit Association) for this purpose. DUNA grants legal entity status to the DAO, enabling contract execution, asset ownership, and exercise of legal rights, while not requiring the complex mechanisms of traditional foundations such as offshore headquarters or discretionary oversight committees. Grant programs, security councils, and upgrade committees previously managed by the foundation are transferred on-chain to operate transparently according to smart contract rules. This reflects Uniswap's commitment not to abandon decentralization. Celo has also made clear that decentralization remains a priority and that governance will continue to be run by the community.
The cases of Uniswap and Celo indicate that the convention of formally separating foundations and Labs is being shaken. The era of deferring decentralization by relying on formal separation is ending, and an era has begun where projects must prove their commitment through substantive incentive alignment and on-chain governance. Going forward, the key points to watch will be whether projects that choose integration actually fulfill their promises to token holders, and whether projects maintaining the foundation-labs separation are truly creating added value through that structure.
