The liquid staking platform MilkyWay has officially announced the permanent shutdown of its Layer 1 (L1) blockchain network. This decision follows a period of significant restructuring that began in early 2025, aimed at winding down operations due to shifts in market dynamics within the broader Cosmos and Celestia ecosystems. As part of the decommissioning process, the protocol is executing a final chain upgrade to facilitate the seamless migration of user funds back to their respective native environments.
Asset Migration and Technical Transition
To ensure the safety of user capital, MilkyWay is implementing a comprehensive asset migration strategy before the network officially goes offline. The protocol has confirmed that assets previously held on the MilkyWay L1 are being systematically returned to their original blockchains. For instance, TIA tokens that were bridged from the Celestia network have already been redirected back to the Celestia mainnet.
The migration includes the following key procedures:
- Completion of final L1 chain upgrades to stabilize the withdrawal environment.
- Automated returning of bridged assets to native sovereign chains.
- Verification of balances to prevent loss of liquidity during the transition.
Ecosystem Challenges and Liquidation Context
The move to shutter the L1 chain is the final step in a liquidation process that was initiated in January. According to project disclosures, the primary drivers for the shutdown included a notable decline in re-staking popularity and insufficient demand for decentralized finance (DeFi) services specifically within the Celestia ecosystem. The broader market shift away from high-yield liquid staking derivatives on modular networks has impacted several emerging protocols throughout the previous fiscal quarter.
In summary, the dissolution of the MilkyWay L1 chain marks the conclusion of the protocol's efforts to provide modular liquid staking solutions. By prioritizing the return of native assets like TIA to their original networks, the project aims to minimize the impact on holders while acknowledging the current lack of sustainable demand for its specialized DeFi infrastructure. Users are advised to monitor their native wallets for the appearance of returned assets as the final shutdown sequence concludes.
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