In a move poised to fundamentally reshape the governance of one of the blockchain industry’s oldest networks, Neo co-founder Da Hongfei has unveiled a sweeping restructuring proposal. The plan, which seeks to return nearly 50 million NEO tokens to the community and enforce a two-year moratorium on both founders holding board positions, is a direct response to what Hongfei describes as years of "trust me" governance, which he argues has left the network largely paralyzed. This radical overhaul coincides with Neo’s first public financial disclosure since 2019, revealing approximately $461 million in assets held by the Neo Foundation and Neo Global Development (NGD) as of the close of 2025. However, the proposal faces significant pushback from fellow co-founder Erik Zhang, who criticizes its reliance on off-chain legal structures and the removal of essential technical oversight.
The Genesis of a Governance Crisis: Neo’s Journey to a Crossroads
Neo, originally known as Antshares, emerged in 2014 as China’s first public blockchain project, founded by Da Hongfei and Erik Zhang. It gained significant traction during the 2017 Initial Coin Offering (ICO) boom, earning the moniker "the Ethereum of China" due to its vision for a smart economy, digital assets, and decentralized applications. The project’s initial promise stemmed from its commitment to compliance with Chinese regulations, a unique selling proposition in a rapidly evolving global market. However, despite its early success and a robust community, Neo has grappled with persistent challenges, particularly concerning its governance structure and the pace of innovation.
The "trust me" governance model, as characterized by Hongfei, refers to a system where significant control over the network’s direction and treasury remained concentrated within the hands of the founders and associated entities, primarily the Neo Foundation and NGD. This centralization, while perhaps expedient in early development stages, has increasingly come under scrutiny in an industry striving for true decentralization. The lack of transparent, community-driven decision-making processes and infrequent financial reporting — with the last public disclosure dating back to 2019 — fostered an environment where community trust could erode, especially as the network navigated critical upgrades and market shifts.
Adding to these internal struggles, Neo faced external pressures. The stringent cryptocurrency bans implemented by the Chinese government significantly curtailed its once-thriving domestic market, forcing the project to pivot its focus internationally. Furthermore, delays in the rollout of its ambitious N3 upgrade, designed to enhance scalability, interoperability, and developer experience, meant Neo struggled to keep pace with the rapid advancements seen in competing Layer 1 blockchains like Ethereum, Solana, and BNB Chain, particularly during the explosive growth of decentralized finance (DeFi) between 2020 and 2022. This confluence of factors led to a decline in user engagement, developer activity, and overall market relevance, leaving the network’s future hanging in the balance.
Unpacking the Radical Overhaul: Key Pillars of Da Hongfei’s Plan
Da Hongfei’s proposed restructuring, dubbed "Giveback II," is a multi-faceted initiative designed to address these deep-seated issues and re-energize the Neo ecosystem. At its core, the plan seeks to decentralize control, enhance transparency, and reposition Neo for future growth.
One of the most significant components is the relocation of the Neo Foundation to the Cayman Islands. This strategic move aims to establish a more robust and internationally recognized legal framework for the foundation, providing clarity and stability for its operations in a global regulatory landscape. Alongside this, the proposal calls for the establishment of a five-member board, which would include an independent Supervisor. This Supervisor would wield significant authority, empowered to block any actions deemed to be in violation of the foundation’s bylaws, thus introducing a critical layer of checks and balances previously absent.
Perhaps the most symbolic and impactful aspect of the plan is the "Giveback II" initiative itself: the return of 49.5 million reserved NEO tokens to the community. To put this into perspective, the Neo Foundation and NGD currently control approximately 41 million NEO tokens, representing about 31.3% of the total supply. This substantial portion of the network’s native asset is primarily managed under single-signature control, a practice that epitomizes the centralized governance Hongfei seeks to dismantle. By returning nearly 50 million tokens, the proposal aims to significantly increase community ownership and empower decentralized governance mechanisms, fostering greater participation in the network’s future. As of April 2026, with NEO’s price fluctuations, this token return could represent hundreds of millions of dollars in value, directly impacting the token holders and potentially enhancing market liquidity and decentralization.
Furthermore, the restructuring imposes a 24-month cooling-off period, preventing both Da Hongfei and Erik Zhang from serving on any governance bodies, including the proposed new board. This temporary but significant exclusion underscores Hongfei’s commitment to breaking the cycle of founder-centric control and allowing a new, community-elected leadership to emerge. The plan also mandates enhanced financial transparency, requiring annual financial reports, on-chain attestations for all large transfers, and fully disclosed multi-signature wallets for all liquid holdings, including Bitcoin (BTC), Ethereum (ETH), stablecoins, and other digital assets. This level of transparency is a stark contrast to the previous lack of public financial disclosures, aiming to rebuild trust and accountability within the community.
The Financial Disclosure: A Glimpse into Neo’s Reserves
The announcement of Da Hongfei’s governance proposal was accompanied by Neo’s first public financial disclosure since 2019, offering a long-awaited glimpse into the project’s financial health. As of the end of 2025, the Neo Foundation and Neo Global Development collectively held approximately $461 million in assets. While the specific breakdown of these assets was not fully detailed, they are understood to comprise a diversified portfolio including Bitcoin, Ethereum, various stablecoins, and other digital assets.
This disclosure is crucial for several reasons. Firstly, it provides a baseline understanding of the resources available to the Neo ecosystem for development, marketing, and operational expenses. For a project that has been criticized for its lack of transparency, this report marks a significant step towards greater accountability. Secondly, the substantial value of these assets ($461 million) indicates that despite the challenges Neo has faced, the foundation retains significant capital to support its future initiatives, including the proposed Neo X blockchain and the broader revival strategy. However, the revelation also implicitly highlights the immense power and control vested in the foundation and NGD, reinforcing the need for the proposed decentralization measures to ensure these funds are managed transparently and in the best interest of the community. The sheer size of this treasury further accentuates the stakes involved in the ongoing governance debate, as its stewardship will be a central point of contention.
Erik Zhang’s Counter-Arguments: A Deep Rift Exposed
The radical nature of Da Hongfei’s proposal has not been met with universal acclaim, particularly from his co-founder, Erik Zhang. Zhang has emerged as a vocal critic, articulating significant reservations that underscore a deep-seated philosophical and operational rift between the two leaders. His primary objection centers on the proposal’s reliance on off-chain legal structures, such as the relocation to the Cayman Islands and the establishment of a legally defined board, to underpin Neo’s legitimacy. Zhang argues that this approach fundamentally contradicts the ethos of blockchain decentralization, which ideally roots legitimacy and governance directly in verifiable on-chain mechanisms rather than traditional legal frameworks. He suggests that such structures merely create a "cosmetic shell change" that fails to address historical accountability issues and could lead to new forms of opacity, citing the potential for "opaque third-party attestations" rather than directly verifiable on-chain addresses.
Zhang’s second major concern revolves around the 24-month exclusion of both founders from board positions. He contends that this cooling-off period would strip Neo of essential technical oversight at a critical juncture in its development. As a key architect of Neo’s technology, Zhang likely believes his expertise is indispensable for navigating the complexities of blockchain development, particularly as the project aims to launch Neo X and pivot towards AI-driven applications. Removing the founders, he argues, could leave a vacuum in technical leadership, potentially jeopardizing the project’s ability to innovate and execute its roadmap effectively.
The public clash between Hongfei and Zhang, now playing out across social media and through competing public statements, exposes long-standing divisions that have apparently festered for years beneath the surface. This open disagreement underscores the profound challenges inherent in transitioning from founder-led projects to truly decentralized, community-governed networks. It highlights the tension between the desire for decentralization and the practical need for experienced leadership, particularly in the highly technical and rapidly evolving blockchain space. The community now finds itself caught between two differing visions for Neo’s future, each presented by one of its original architects.
A Broader Trend: Governance Struggles Across DeFi
Neo’s internal struggle is not an isolated incident but rather mirrors a broader governance crisis unfolding across the decentralized finance (DeFi) and wider blockchain ecosystem. The challenge of transitioning from centralized development teams to genuinely decentralized autonomous organizations (DAOs) remains one of the industry’s most pressing issues.
For instance, the Aave protocol, a leading DeFi lending platform, has experienced its own significant governance disputes. Tensions have arisen between the founder-aligned Aave Chan Initiative and other stakeholders concerning the extent of power and influence that entrenched service providers and original teams should wield within the DAO. These debates often center on issues like treasury management, protocol upgrades, and the allocation of development resources, reflecting a recurring struggle to balance efficiency with decentralized ideals.
Similarly, the recent controversy surrounding World Liberty Financial, a project linked to the Trump family, further illustrates the fragility of nascent governance models. The project drew sharp criticism from stakeholders, including Tron founder Justin Sun, over proposed token unlock schedules and discretionary treasury control. Such incidents highlight the community’s increasing demand for transparent, equitable, and verifiable governance mechanisms, especially when significant financial stakes are involved. These examples underscore that as projects mature and their treasuries swell, the mechanisms for decision-making, accountability, and power distribution become paramount, and the failures to address these can lead to significant community unrest and erode trust. Neo’s current predicament is thus a microcosm of a larger industry-wide reckoning regarding the true meaning and implementation of decentralization.
The Path to Revival: Neo X and the AI Agent Vision
Da Hongfei has been remarkably candid about Neo’s current standing, acknowledging that its user base and market activity are "not where it was in the 2017 to 2021 cycle." He openly admits that activity is now concentrated among long-term holders, and the once-dominant Chinese market has contracted under Beijing’s strict crypto bans. Furthermore, Neo’s delayed N3 upgrade meant it largely missed out on the DeFi boom that propelled many other Layer 1s to prominence.
To reclaim relevance, Hongfei’s revival strategy centers on positioning Neo X as an "agent-first" blockchain optimized for autonomous AI agents. This forward-looking vision bets that the next decade of on-chain activity will be increasingly driven by machines transacting on behalf of humans, rather than by direct human interaction. Neo X aims to provide a robust, scalable, and secure infrastructure specifically tailored to facilitate these AI-driven transactions and interactions, anticipating a future where AI agents require their own native blockchain environment. This strategic pivot seeks to carve out a unique niche for Neo in an increasingly crowded blockchain landscape, leveraging the burgeoning interest in artificial intelligence.
The success of this vision, however, is inextricably linked to the resolution of the current governance crisis. Hongfei has indicated that he would reassess his own board ambitions and potentially step back if Neo fails to complete the proposed restructuring and attract meaningful AI-native development within the next 12 to 24 months. This self-imposed deadline underscores the urgency and the high stakes involved in the current debate.
Implications and The Road Ahead
The proposed governance overhaul and the ensuing founder clash carry profound implications for Neo’s future. If successful, Da Hongfei’s plan could significantly enhance decentralization, re-engage the community through substantial token returns, and establish a more transparent and accountable financial framework. Such a transformation could potentially reignite developer interest and user adoption, especially if the Neo X vision for AI agents gains traction. The move to the Cayman Islands and the introduction of an independent Supervisor could also provide a more stable and reputable legal foundation for global operations, attracting institutional participation.
However, the path is fraught with challenges. Erik Zhang’s strong opposition highlights the risk of a deep internal schism, potentially leading to further delays or even a fork in the project if the founders cannot reconcile their differences. The removal of key technical leadership, even temporarily, could create a vacuum that new leadership might struggle to fill, impacting the execution of complex technical roadmaps like Neo X. Moreover, the success of the AI agent-first strategy is highly speculative and depends on broader market adoption of AI agents, a trend that is still in its nascent stages.
The next 12 to 24 months will be critical for Neo. The community’s reaction to the ongoing dispute, its willingness to embrace the proposed changes, and the ability of new governance structures to effectively lead the project will determine whether Neo can shed its legacy of centralized control and reclaim its position as an innovative force in the blockchain space. The outcome of this high-stakes governance battle will not only shape Neo’s destiny but also offer valuable lessons for other blockchain projects grappling with similar transitions from founder-led initiatives to genuinely decentralized ecosystems.
