Compiled by: Felix, PANews
Reference sources: Ignas | DeFi Research, Coindesk
ROOK DAO is discussing dissolving the DAO. Users have expressed concerns about the project's stagnation and lack of transparency. The proposal is to distribute DAO treasury assets to ROOK holders and could generate a 250% return. The Rook Protocol helps protect users and decentralized applications from the negative impact of MEV by managing MEV at the application layer. It is community owned and managed by a DAO.
According to @0xWismerhill's proposal, the misalignment of interests between the management team and ROOK token holders is reflected in the slow growth of the protocol and the shortcomings of the gatekeeping mechanism. For example, the current team is vetoing and controlling community-led proposals that do not serve their purposes.
The proposal intends to dissolve the DAO and distribute ROOK’s governance treasury (about $51 per token) proportionally to ROOK governance token holders. The proposal gives several reasons:
First, the governance mechanism excludes token holders from the governance process to ensure the power of the management team.
Second, the leadership failed to achieve growth in the protocol and was suspected of profiteering. Transaction volume fell by about 78% in 6 months. 22 DAO contributors spent $6.1 million per year ($300,000 per contributor), and only 10% of their compensation was paid in ROOK tokens because the ROOK price was falling. (Note: After ensuring that they received enough ROOK tokens to participate in each governance vote, the 22 DAO contributors decided to maximize their personal returns by increasing the compensation ratio in stablecoins)
Furthermore, the project is currently valued at less than $17 million, a 61% discount to the DAO’s $44 million governance token-controlled reserve. While ROOK tokens have risen 27% since the proposal was submitted, ROOK token holders have incurred financial losses because they were unable to prevent the transfer of assets from the treasury to the management team.
Third, the management team has no public roadmap or goals. In a governance call, CEO Hazar explained that this was due to the wishes of order flow suppliers (i.e., customers of the ROOK protocol) who were reluctant to publish roadmaps.
Fourth, the project governance lacks corresponding transparency. In the governance conference call, Hazard also admitted that DAO lacked knowledge and voice in operational activities. He attributed it to some large projects that wanted to use ROOK to capture transaction value on Ethereum: "It is the limitations of these projects that have led to very few matters that ROOK DAO can understand and participate in governance." In addition, in terms of the transparency of leadership personnel, Hazard believes: "It is difficult to use personal information for public governance."
Fifth, Hazard downplayed the importance of tokens. Based on the output of ROOK, Hazard warned speculators not to count on the price performance of ROOK. This reminds people of Andre Cronje’s discussion about “DeFi construction is bad” 2 years ago.
This article does not intend to spread FUD (fear, uncertainty, and doubt), but this proposal may have significant implications not only for ROOK token holders, but also for the entire DeFi market.
And this is not the first time a DAO has been dissolved. Last year, FEI Protocol DAO also voted to close due to the deterioration of the macro environment and regulatory risks. (Related reading: Fei Protocol's big failure: born with a silver spoon to ending due to merger)
