The history of Lisk is a vivid example of how a rapid rise during the ICO boom era can turn into an equally rapid fall. In 2016, this project was the second-largest crowdfunding campaign in cryptocurrency history, raising over 14,000 BTC (about $5.7 million at the time), second only to Ethereum. The market capitalization of the LSK token then reached nearly $4 billion. Today, the team officially announces a complete abandonment of its own blockchain and a shift to a business model focused on financial solutions for enterprises. What went wrong?
Why Lisk is leaving its network
This is not the first radical change of course for the project. As early as December 2023, the team abandoned its own layer-1 (L1) network and rebuilt Lisk as a layer-2 (L2) solution on Ethereum. However, even this updated version, which existed for less than two years, is now declared obsolete. The network shutdown is scheduled for October.
The reason for this decision lies on the surface — the market no longer believes in this asset. The LSK token, which reached an all-time high of $34.92 in January 2018, is now trading around $0.09. That is more than 99% below its peak values. A low of $0.07 was recorded on August 3, just three weeks before the current announcement. Add to that the fact that in July, Binance placed LSK on its monitoring list as a candidate for delisting — and the picture becomes completely clear.
Burning 100 million LSK and liquidating the DAO
The proposal submitted to the Lisk governance forum provides for the burning of 100 million LSK from the DAO treasury. This will reduce the total token supply from 400 million to 300 million, i.e., by 25%. Staking will become flexible: holders will be able to withdraw funds at any time after a three-day waiting period.
For LSK holders on Ethereum and exchanges, nothing changes — the contract and ticker remain the same. However, those holding tokens on Lisk Chain or participating in staking need to transfer them to Ethereum via the bridge by October 31. The migration process takes at least seven days, and unstaking adds another three days after the vote is approved.
Coinbase's Base network will become the primary venue for LSK alongside Ethereum itself. The token will receive incentive asset status, and businesses on the platform will be able to earn rewards in LSK and use it to pay fees. Developers will be offered migration to Celo, which in March 2025 itself went from an independent L1 to an L2 on Ethereum.
"DApps, developers, and teams that worked with Lisk Chain have created real products for real users. None of this will be lost in the shift of direction," the announcement states.
If the DAO vote is approved, LSK will finally cease to track a blockchain and will become a token tied to a software business.
My comment: This story is a classic example of how the lack of a real product and competitiveness amid the rapid development of the Ethereum ecosystem leads to the degradation of even the most ambitious projects. Lisk failed to find its niche, and its transformation into a "utility token" for a B2B platform looks more like an attempt to salvage something than a strategic move. Investors should learn a lesson: a $4 billion market cap at the peak of hype does not guarantee long-term survival.