Rook quadrupled by disbanding, how did the "DAO Predator" hunt the DAO treasury?

Defending buying, the profit-making strategy of the bear market has reached a new height.

Written by: 0x26

In the currency circle of 17 years, when the project behavior does not match the contract or commitment, what do retail investors mainly rely on to protect their rights?

Relationships, the police, rights protection groups, dichlorvos, and the conscience of the team.

However, since DeFi Summer, governance tokens (governance tokens) have taken advantage of the bull market, and with the rise of the DAO concept, governance has almost become the most important use case for newly issued tokens in the Crypto market. What is the actual state of governance? Each participant has their own answer.

Interestingly, in the bear market, along with the continuous downturn in currency prices and community activity, a wave of "acquisition" governance using RFV (risk free vaule) strategies began to form.

Rook skyrocketed by dissolution proposal

Everything about Rook's recent explosion started with a $6.1 million proposal.

The Rook core team submitted a salary proposal in the governance forum. Once this proposal was launched, it caused dissatisfaction in the community. The community believes that, based on the team's previous actions and the current market background, the team should not receive such high incentives.

It just so happens that some community users have been paying attention to Rook based on the RFV strategy. Riding on the discontent caused by Team Rook, astute community member Wismerhill launched a governance counterattack on March 22. He listed the reasons for disbanding Rook DAO in detail, including:

• Mismatch of interests between the project team and the DAO community;
• The team has the right to reject all unfavorable proposals from the community;
• In the case of a sharp decline in token trading volume and slow product development, 22 community members need to take away 6.1 million US dollars in remuneration from the treasury, of which only 10% are ROOK tokens, and the rest are mainly stable coins;
• The community treasury holds about 44 million USD tokens, but the current ROOK token market value is only 10 million USD, and this is mainly due to the team's inaction.

Therefore, the proposal calls for disbanding Rook DAO and distributing the treasury to ROOK token holders in proportion, and the compensation for each token is about 54.9 US dollars. At this time, the price of its token ROOK is only around $13.

After 3 weeks of debates between the community and developers, a preliminary agreement was finally reached around April 5, during which the price of ROOK also increased significantly. In the end, the "freedom" movement initiated by the Rook DAO holders was declared a success with the passing of the core proposal for the establishment of the RFV entity Incubator DAO. Incubator DAO means that token holders can unlock their ownership of the treasury, and the Rook Labs team can continue from their projects without the burden of worthless governance tokens.

From the repurchase proposal initiated by the community on March 22, to the final approval of the DAO proposal. ROOK is up roughly 230%, and 329% at the time of writing, finally successfully reflecting the value of the treasury on the ROOK token.

What is the RFV strategy?

RF stands for "risk free" and RFV stands for "risk free value". According to the actual situation in the industry, the RFV strategy can be simply understood as: when the project treasury is not limited to its own tokens, and the market value of the treasury is significantly higher than the market value of the project tokens, the use of funds for the treasury can be determined through governance proposals. These uses mainly include: direct repurchase of tokens, distribution of dividends or dissolution of projects.

Such governance buying is nothing new on Wall Street. Carl Icahn (Carl Icahn) was one of the earliest Activist shareholders (also known as shareholder activists). After the acquisition and divestiture of TWA that shocked the United States in 1985, he established his status as a master of hostile takeovers. During his years in the business, he has never given up on using the method of hostile takeovers.

Although the market has mixed praise and criticism for his approach, his behavior has indeed improved the capital efficiency of some companies and also hit the management of some companies. Fortune magazine also used "He probably made more money for shareholders than any other activist investor on the planet" to evaluate him.

According to Carl Icahn's hostile takeover, Hollywood once created the classic movie "Wall Street." In the movie, Michael Douglas' character utters the classic line: "Greed is good. Greed is right. Greed works." (Greed is good. Greed is right. Greed works.)

In the currency circle, when it comes to the application scenarios of the RFV strategy, it is generally aimed at projects that have had a large amount of public fundraising and can really be governed. Users can query the status of the project treasury through the Token Terminal.

Failure is normal

If you think that retail investors in the secondary market can use governance tokens to easily dissolve the project, or let the agreement return the funds. Then you are dead wrong.

As crypto veterans who dig deep into every potential project, focusing on project progress and governance proposals, RFV hunters have more to lose than lose. The main reasons include: the founding team does not recognize DAO and turns DAO funds into its own "little treasury"; the founding team obtains absolute control through various implicit conditions; and shirks proposals for various reasons (such as laws, etc.).

Solana lending and stablecoin issuance platform Parrot publicly raised more than 69 million during Solana Summer, and the total funds of the community treasury reached 85 million US dollars, and its treasury funds far exceeded the market value of its tokens. An introduction from CM (9,5) shows us why monetizing RFV did not work out in Parrot:

• During this year and a half, the project party lost 8 million US dollars due to bad debts, bad investments and hacking attacks;
• At the same time, the founder also invested 10 million in the Ethereum multi-signature wallet, but the team not only did not want to disclose the details of the transfer of this money as an investment, but also did not want to disclose the address of the multi-signature;
• Without the approval of DAO, the founder used the treasury to buy a large amount of ETH when it was high;
• On April 2, $300,000 was transferred out without the community's knowledge.

At the same time, communication between team members and founders is also very difficult. They only have one hour of communication time per week, and all actions need to be directed by the founder. This has resulted in an absolute split between the community treasury and the token price. It can be said that the funds of the community are completely at the discretion of the founders. Coincidentally, the Olympus fork project Hector from the Fantom chain is also facing the same situation.

The most controversial RFV governance incident recently is Aragon's attempt to transfer governance rights. Considering Aragon's historical status, token market value and activity in the DAO field, this matter has attracted widespread attention. Not only did all the RFV hunters mentioned above appear on the stage, but Arca, a well-known asset management institution in the industry, took the lead in initiating a proposal, the main content of which was to provide part of the funds based on RFV to token holders.

Aragon is a DAO governance project that started in 2017. Its initial response was to block relevant proposers and active users, trying to transfer governance rights from tokens, and suspected that it had been 51% attacked by the RFV organization.

For the overreaction of the project party, some community users described it as: Arca and some other ANT token holders walked into Aragon with a note saying "We are considering withdrawing $80", while Aragon Bank The teller responded by calling the police, stealing the money from the vault, setting the bank on fire, and threatening to open a new bank in a new country, but with no access for the original customers.

Aragon's announcement sparked outrage in the community. As a result, Aragon had to make a further statement, showing its basic principles guided by the DAO organization, and lifted all blocking to appease the community, and further communicated with all parties. Not only that, Aragon founder Luis Cuende also released a preliminary proposal for a $30 million repurchase, and the community is in close communication.

Governance Myths

Ironically, projects that can use the rfv strategy are already considered "conscience" projects in some cases. Compared with the teams of well-known projects Rook and Aragon, there are more projects in the market that have already existed in name only, and the teams that firmly control the community treasury are gradually eroding funds in one way or another. Many users are also No wonder.

Not defending rights is naturally a happy situation for everyone, and it is only natural that the project party concentrates on development and does not pay attention to price. But when forced to do so, is the team willing to fulfill their previous commitments and regard governance tokens as an important part, or treat them as nothing?

No industry or start-up company can guarantee 100% success, and when a project fails, how the team can reasonably balance the interests of all parties and let go gracefully is exactly what this industry should actively explore under the current market conditions. It is obvious that tokens have brought huge wealth to various project parties, but the accompanying responsibilities are rarely mentioned. A large number of homogeneous projects have been launched in batches in the bull market, and after several rounds of baptism in the market, it is obvious whether it is worth continuing to operate. Unfortunately, the resulting governance tokens rarely determine the major development direction of the project.

Whether you are a degen rushing party who doesn't ask the source, or a rational buying price investor. How to ensure that the team can continue to implement the roadmap after financing-launching-getting rich, and fulfill their promises when releasing tokens, instead of facing the sea with spring flowers blooming, or starting a new stove? What should users in the secondary market rely on to safeguard their reasonable rights and interests?

For now, for unarmed retail investors in the secondary market, whether it is in terms of the number of tokens or personal voice, it may not be the best choice to follow the example of Carl Icahn and "protect their rights" through governance.

During the disbandment of Rook, community members left messages under 0xWismerhill Twitter. Not sure if it can represent the real voice of governance token holders?

References:

Aragon Open Letter

「That』s Our 2 Satoshis」 —DAO Dilemmas: Unraveling Aragon's Governance Controversy

Aragon Association Takes Action to Safeguard the Mission of the Aragon Project and its Community of Builders

Carl Icahn Wikimedia Commons

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