This Week in DAOs - September 23, 2021

Hostile DAO Takeovers, Shapeshift's Fairdrop, and a Report on Compound's Grant Program.

Another week down means more news to catch up on in the world of DAOs. Keep scrolling!


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📊 This Week’s Stats

Ecosystem Overview - September 23, 2021:

  • 💰 $7.6 billion in DAO treasuries 💰

  • 🗳️ 235,548 ballots ever 🗳️

  • 👥 60,031 unique voters ever 👥

  • ✍️ 6,029 proposals ever ✍️

Governance Activity - Last 7 Days

  • 🗳️ 6,991 ballots cast on 74 different proposals 🗳️

  • 👥 2,531 unique voters 👥

  • 🌐 29 DAOs with active voters 🌐

  • ✍️ 39 new proposals created this week ✍️

📰 This Week’s News

Hostile DAO Takeovers

An oft-asked question amongst DAO theorists is what DAO M&A might look like one day. As DAO-to-DAO business activity proliferates, will complementary DAOs frequently join forces? Will large DAOs swallow smaller ones? What might the equivalent of "activist shareholders” in equity markets look like in DAOs?

In this newsletter, we’ve covered several examples of related trends. Examples include DAO-to-DAO loans, “franchisee” DAOs, and a DAO merger.

This past week, Robert Leshner of Compound brought attention to what he called the first DAO hostile takeover:

Venus Protocol is a decentralized money market on Binance Smartchain. Last week, a group of Venus community members proposed the creation of “Team Bravo” - which seems to be best understood as a competing core developer team with the “main aim … to increase and sustain a high XVS price for its investors.”

Read the Proposal

The proposal would have put Team Bravo on the “same level of [the] current team in terms of voting & funding capability” by granting them 900k XVS tokens to create and pass the official proposal and 1.9m XVS tokens over 5 years. Interestingly, it would’ve also distributed 900k XVS tokens to any XVS holders that voted for the proposal!

Though the proposal passed by a slim margin, its implementation was canceled - presumably by the existing developer team - which, of course, calls into question the decentralization of Venus to begin with.

However, this situation is an interesting case study of how hostile takeovers of DAOs may happen elsewhere. The people behind the Team Bravo proposal effectively tried to bribe their way into power by offering their supporters direct compensation and appealing to their financial self-interest by saying they’d focus exclusively on increasing the token price.

In the replies to Leshner’s tweet, Twitter user @Mindaoyang provided another recent example of a “governance attack” in Yuan Finance - a token that tracks the Chinese Yuan’s exchange rate against USD. Though different than Venus in that the malicious actor brute forced a takeover of Yuan Finance by purchasing YUAN on the open market, it is nonetheless another useful case study to learn from when designing decentralized governance systems.

Read More on Yuan Finance Takeover

Shapeshift’s Fairdrop

Shapeshift DAO (which uses Boardroom as its default governance interface), was formed in July 2021 with the largest airdrop in history. This event kicked off arguably one of the most substantial examples of an established traditional company transitioning into a DAO.

One aspect of that airdrop was rewarding 200 FOX to 123,827 wallets that held at least $1,500 worth of the governance tokens of 13 DeFi DAOs: Gitcoin, Uniswap, SushiSwap, Yearn, Aave, Alchemix, BadgerDAO, 1inch, Compound, Curve, Balancer, Maker and 0x. The reason for doing so was to encourage good faith participation between ShapeShift DAO and these leading DeFi protocols.

Last week, the community considered a proposal to conduct a follow-up airdrop (aka a fairdrop) to roughly “33,000 DAO community token holders previously ineligible because their tokens were locked in staking or liquidity providing activities.”

The proposal passed with overwhelming support: 2.9 million $FOX voted Yes and 847 $FOX voted No. The fairdrop took place on September 23rd.

Read ShapeShift's Summary

Compound Grants V.1 Concludes

Compound Grants was among the first DAO grants programs ever created. Administered by Reverie’s Larry Sukernik, it was funded in March 2021 with 4,444 COMP (roughly $2m) and set up to distribute funds for two quarters.

In a recent post in Compound’s Discourse forum, Sukernik reported on the results of this first version of Compound Grants, described the lessons learned, and outlined the plans for the future.

Read the Report

Compound Grants funded over 30 grantees with over $1M in funding since it was established. Going forward, Sukernik’s hope is to build Compound Grants into

“The best community-led organization, ever. That means staffing CGP with a full-time team, developing a clear communications process so the community knows what’s being worked on and what needs to be worked on, and constructing incentives for contributors to work on Compound exclusively.”

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