Lessons From a DeFi DAO Divorce

  • By bitcoincasts
  • November 01, 2022

It's kind of likeCoincidenceFor the victims of the US $80 million Rari/Fei attack last April, they voted today to determine the payment assets, "making them more and more detailed". The marriage between two Decentralized Finance (DeFi) agreements, namely, Rari Capital and Fei Protocol, will also be eliminated, marking the end of one of the most famous alliances in DeFi.

Last year, TribeDAO, the head office of foreign investor Fei, optimized the algorithm to stabilize the currency, worked together with the blockchain technology lending contract, Rari Capital. For DeFi, this is a great moment, involving two development teams coming from behind, billions of dollars of capital, and the conceptual verification of the merger and acquisition of enterprises on the chain through the ideological implementation of the agreement.

Rari won the stable currency FEI with continuous growth, and the FEI agreement won the loan pool of Rari. The two new projects did not break up their development teams. (It is worth mentioning that FEI encountered reliability problems during the release process, and as one of the few stable currencies that are completely applicable to data encryption (or optimization algorithm), it has been in a more "experimental" period.)

Jeff Amico of A16z said at that time that this cooperation was "a new initial whole process, committed to harmonizing the incentive system between Web3 communities". RARI token holders also have the opportunity to exchange their tokens for TRIBE, thereby obtaining shares in new power plant projects, and allow the two agreements to operate under a common corporate vision and economic benefits.

Disintegrating tribes

Everything was carried out according to the plan until the main product of Rari, "Open Financial Market" Fuse, was attacked. Fuse enables everyone to establish a liquidity pool to buy and sell all quantities of Ether tokens, generally for FEI stable coins. On April 30, the project encountered another attack of 80 million dollars, which basically consumed the liquidity of the project.

One vote was required to besiege the victims' expenses with tribal financial repayment. It is based on high participation, which is applicable to about 75% of voters. However, in the initial voting, there were very few details about the payment plan. Once they had a better understanding of who paid for whom, Fei's leadership violated the voting.

After publishing the initial "snapshot update", the whole process was not constrained, because it was not "on the chain", leadership Fei called for another vote a few days later. The victims of Sarg will still receive compensation under a new plan, but only in part. Naturally, this led to months of disputes, personnel adjustments and calls for the dissolution of the Ferrari Guild.

Sam Kazemian, founder of Frax Finance (who lost about 12 million dollars in the Fuse attack), said that this was also the "lowest DeFi". Fei raised US $1.3 billion in ETH earlier and had sufficient reserves to make every victim recover from the attack. However, he gradually doubted whether it was the right way to fully consider the vicissitudes in the "macroeconomic policy" environment and the decline of the whole market industry.

Now, through a series of four rectification votes in the past few months, the blockchain technology autonomous organization (DAO) has more or less returned to its original position. This is a test story of democratic party governance, self-interest voting and regional party building. In this era, management decisions should follow the codes prepared in advance.

The final vote was based on the plan with 99% of the vote, but there was no right to deny the determination. FEI holders can obtain an escape exit to DAI in TX, another stable currency, while TRIBE holders will allocate market share of the DAO assets in proportion. Sharing and rectification are being disbanded.

If there is a wider range of lessons learned from Sage Fay's breakup, it is to prepare for the disaster in advance. Rectification is always a messy problem, especially in the difficult stage. It is not unlikely that DAO will be put together in the near future, but it is increasingly clear that the unified community will collapse as long as there are several economic development incentive teams. When money is on the front line, people have no common understanding of what is fair and just. So maybe there is a market for DAO prenuptial agreement.