Woofun AI reports that Lisk has initiated a strategic dissolution of its decentralized autonomous organization, proposing the permanent removal of 100 million LSK tokens from circulation alongside the cessation of DAO governance functions. This structural overhaul is intrinsically linked to the broader operational wind-down, including the transfer of significant treasury assets to Lisk Ltd., marking a definitive shift away from community-led blockchain management.

The core mechanism of this supply-side intervention targets the 100 million LSK tokens originally earmarked for the DAO treasury during the 2027–2033 period. By executing this burn, the total circulating supply will be reduced from 400 million to 300 million, effectively eliminating these assets from the market permanently. This aggressive contraction aims to alter the token's economic fundamentals by artificially inducing scarcity, a move designed to counterbalance the diminishing utility of the underlying network.

Woofun AI data shows that simultaneously, the proposal mandates the transfer of approximately 47 million LSK—funds currently held in the DAO treasury or allocated through 2026—to Lisk Ltd., the corporate entity behind the project. Governance structures will be dismantled, including the closure of the governance forum, while staking mechanics are adjusted to remove early unstaking penalties. Despite this increased flexibility, users must still observe a three-day waiting period before withdrawing their staked positions, ensuring a controlled exit flow.

This financial restructuring occurs against the backdrop of Lisk's confirmed decision to shut down its native Layer-1 chain on Oct. 31. The termination of the blockchain infrastructure signals a retreat from the competitive Layer-1 landscape, where the network had struggled to sustain momentum. By decoupling the token's value proposition from active chain operations, Lisk attempts to preserve asset value through supply reduction rather than network growth.

Community sentiment remains divided as the governance vote approaches in the coming weeks. While some stakeholders view the burn as a necessary reward for long-term holders, others express concern over the lack of transparency regarding Lisk Ltd.'s intended use of the transferred funds. This marks a critical juncture for LSK, where the outcome will determine whether the token can maintain relevance post-chain shutdown.