Sweeping Reform Proposal Ends Years of Deadlock

Neo co-founder Da Hongfei has formally proposed a sweeping overhaul of the Neo Foundation (NF), offering a structural remedy to a network left effectively paralyzed by years of conflict with co-founder Erik Zhang.

The proposal comes alongside Neo's first public financial disclosure since 2019, revealing approximately $461 million in assets held across the Neo Foundation and Neo Global Development (NGD) as of end-2025.

Why It Matters: The Limits of Founder-Centric Governance

At the core of Hongfei's plan is a break from the informal, founder-driven governance that defined Neo's first decade. Key elements include redomiciling the foundation to the Cayman Islands, establishing a five-member board and an independent Supervisor empowered to block bylaw breaches, and imposing a 24-month ban on either founder sitting on the board or supervisory body.

The proposal also includes a 'Giveback II' plan to return 49.5 million reserved NEO tokens to the community, along with mandatory annual financial reports, onchain attestations for large transfers, and fully disclosed multi-signature wallets for BTC, ETH, stablecoins, and other liquid assets.

Hongfei cited Ethereum creator Vitalik Buterin's influence-through-research model as the standard founders should emulate, directly criticizing the current approach as 'trust me' governance.

Co-Founder Pushes Back

Erik Zhang has contested key elements of the proposal, reigniting internal divisions. He described the Cayman redomiciliation as a cosmetic shell change that dodges historical accountability, criticized reliance on opaque third-party attestations over directly verifiable onchain addresses, and argued that excluding him from the board for 24 months strips Neo of essential technical oversight.

Historical Context: A Common Struggle for Aging Networks

Neo's governance battle mirrors broader tensions across DeFi. Aave's long-running dispute between the founder-aligned Aave Chan Initiative and other stakeholders raises similar questions about entrenched power. Trump family-linked World Liberty Financial (WLFI) drew sharp criticism this week over proposed governance token unlock schedules and discretionary treasury control.

Once heralded as the 'Chinese Ethereum' during its 2017–2021 peak, Neo lost much of its core market after Beijing's crackdown on crypto and missed the DeFi Summer wave due to development delays.

Outlook [Expert Analysis]

The success of this proposal will likely hinge on whether Zhang ultimately agrees to its terms. Without resolution of the founders' disagreement, the proposed board structure may face legitimacy questions before it even launches.

From a broader perspective, Neo's case is likely to serve as a precedent for how legacy blockchain networks with large treasuries manage the transition away from founder control. If institutional transparency measures—mandatory annual reports and onchain attestations—are successfully implemented, similar aging networks may face pressure to follow suit.

However, community skepticism over whether legal redomiciliation in the Cayman Islands genuinely ensures decentralization is unlikely to dissipate in the short term.