DXdao faces two threats.
First threat is a SLOW BLEED FAILURE, fruitless spending on contributors without meaningful delivery until treasury is empty.
Second threat is SPIRALING DXD REDEMPTIONS that completely drain the treasury due to the flawed DXD “token model.”
Let’s dive a little deeper . . .
To anyone paying attention to DXdao over the years, the first should now be obvious. DXdao has failed to ship meaningful products and things seem to be getting worse. Mesa deprecated and Aqua abandoned, Omen abandoned, Swapr only $650K TVL on Arbitrum, Carrot no recent progress, and perhaps worst is DXgov which has yet to ship anything besides a buggy-clunky version of DAOstack’s Alchemy. There has been no progress on Gov 2.0, which could perhaps have introduced some accountability. All this stagnation and yet DXdao’s budget for this year allocates over $1M to non-product roles as well as $1M to DXgov which has failed to ship anything. If the current direction continues, DXdao will simply continue to burn treasury funds until it runs out of money, whether that’s in 2 years or 10 years.
Treasury Spiraling Down the Drain
To anyone paying attention to the new “DXD Token Model” it is clear that under the current model the treasury will be fully drained in short order. The concept is quite simple. Every DXD may be redeemed for 70% of the current Net Asset Value of the treasury per circulating DXD. Every DXD redeemed increases the value of redemption of the next DXD, increasing the appeal of a redemption and accelerating the drain well beyond 70% of where NAV started. In addition, the $2-3M of spending per year and continued DXD rewards to contributors, alongside the languishing hope of product revenues, is acting to erode the NAV. So while there is some incentive to wait for other DXD holders to redeem first, people won’t sit around for long watching their value eroded by contributor spend. And the more DXD redeemed the more aggressive the erosion of NAV in percentage terms. Already 10K+ DXD has been redeemed, and there is every reason to believe this will accelerate and bring the treasury to zero quickly, with the last redeemers in this game of musical cheers reaping the greatest benefit of this foolish policy.
What can be done about this?
How can DXdao be saved from the clutches of bureaucracy and mismanagement? The answer to these problems is simple. Stop. Stop spending on non-productive contributors. Stop draining the treasury. Leave only the top 5 technical contributors and carve out ample resources from the treasury to give them a shot at preserving what is good about DXdao. DXdao contributors have already been funded through first half of year. This gives time for current contributors to show what they can ship, or to decide to find arrangements elsewhere.
Who can save DXdao?
It is clear that DXdao, through REP minting, has been taken over by contributors. There is clear resistance to accountability. OGs who were there from the beginning like John Kelleher and Corkus have given up and left. A bit paradoxically, contributors also appear to be asleep at the wheel when it comes to the treasury spiral.
Are we stuck in the clutches of contributor obstinance and apathy? Perhaps, but there is one last hope to SAVE OUR DAO. Most proposals are passed by “holographic” consensus, requiring first DAOstack’s GEN token to be staked, and then allowing proposals to pass by “relative majority,” i.e. having more votes for than against. Through downstaking GEN, it is possible to block this method of passing proposals, leaving only the ability to pass proposals by “absolute majority,” i.e. 50% or more in favor. This is our best shot to fix the problems above and give DXdao a fighting chance at survival. A multisig has been established to accumulate and utilize GEN to protect DXdao from the above failure modes. This is a CALL TO ACTION for all concerned citizens of DXdao to send their GEN to this multisig or otherwise support this effort.