The market cap of the token is significantly below the treasury reserves, plunging Gnosis DAO into the turmoil of a redemption proposal.
Written by: Protos
Compiled by: Chopper, Foresight News
A group of aggressive investors (or 'treasury raiders') is targeting GNO token holders with a treasury redemption proposal.
The GIP-150 proposal aims to launch a one-off, voluntary, pro-rata treasury redemption scheme. If the proposal passes, supporters will share a portion of over $220 million in reserve funds within the Gnosis DAO treasury on a pro-rata basis.
This proposal comes less than six months after the Gnosis DAO voted to remove the treasury manager KPK. The proposal initiator, Wismerhill, stated that the market price of GNO tokens has long been at a discount compared to the net asset value of the Gnosis DAO treasury, and this discount is continuously expanding. He added that despite the DAO recently allocating $22.5 million to Gnosis Ltd, the discount relative to net assets has further widened, leaving minimal value capture for GNO.
The proposal vote has opened, with a deadline of May 12. Although initial supporting votes had a strong lead, currently 65% of the 330,000 votes cast are against it.
The redemption amount will be calculated proportionally based on 1.3 million eligible GNO tokens, excluding tokens held by Gnosis Ltd. The rationale given in the proposal is that this entity has long received support from DAO funds.
Based on calculations, the redemption value of a single token is approximately $170, nearly 30% higher than GNO's current market price of $131.
Responses from the DeFi community
DeFi commentator and GNO holder Ignas admitted: 'The RFV logic does hold some merit,' but also pointed out, 'This is purely an arbitrage play and can't be considered a moral action at all.' He has cast a 'no' vote. (Note: RFV stands for risk-free value.)
Ethereum Foundation's DeFi head ivangbi shares a similar view, stating that since Gnosis has never publicly advertised its treasury assets as a backstop for token prices, holders do not have a legitimate moral claim to divide the treasury.
Many also consider Gnosis's contributions to the industry ecosystem and do not agree with this proposal. Gnosis oversees core infrastructure projects like Safe, CoW Swap, Gnosis Pay, and Gnosis Chain.
Gnosis founder Sebastian Bürgel bluntly asked when the industry's most respected ecosystem builders became targets for hedge fund harvesting. Jito ecosystem leader Nick Almond directly characterized this proposal as a blatant treasury dump and exit strategy.
Anthony Leutenegger, a representative from the Aragon team who was targeted by similar forces in 2023, has a more moderate and rational viewpoint. He calls for the industry to improve the rights mechanisms for token holders to better coordinate incentives and resolve such disputes.
Past RFV targeting cases
This group has launched similar treasury arbitrage actions multiple times in 2023, leading to them being labeled as RFV raiders in the industry, though they do not accept this title.
Projects targeted in the past included Rook, FEI/Tribe, and Aragon, with Aragon ultimately being forced to adjust the use of its treasury funds towards an ecosystem donation and support plan.
Not long ago, the Beefy Finance token BIFI fell below its treasury net asset price in April, prompting the DAO to quickly implement a buyback mechanism to avoid being targeted by RFV arbitrageurs.
Regarding the Gnosis incident, proposal initiator Wismerhill previously admitted he has always admired Gnosis DAO and even predicted that after the removal of KPK, Gnosis would make more commercially driven decisions.
Right now, this vote will ultimately test whether GNO holders value short-term commercial arbitrage gains more than long-term ecosystem building.