Long Take: Corporate Raiders of DeFi treasuries attack, starting with Aragon & Rook DAO
Long Take: Corporate Raiders of DeFi treasuries attack, starting with Aragon & Rook DAO
What is the Web3 version of the poison pill?
Gm Fintech Architects —
Today we are diving into the following topics:
Summary: We look at corporate raiders emerging in the Web3 financial markets. Once the value of a project’s treasury falls below the market capitalization of its token, there are incentives for financial actors to purchase sufficient voting power to create a spinout or a dividend of the project’s underlying assets. This activist investment strategy is only now showing up in Web3 with Rook DAO and Aragon as targets, after decades of being successful in traditional equity markets. We touch on the distinctions between insider trading, market manipulation, and legal but damaging vulture investing. Last, we talk about defenses — whether those are poison pills, or Aragon’s grants program response.
Tags: Aragon, Rook DAO, Carl Icahn, capital markets, corporate raiders, investment strategy, treasury management, ICOs
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Long Take
Philosophy at Odds
One of the weird and wonderful contradictions in Web3 is the combination of its philosophical roots.
On the one hand, it is a libertarian free-for-all where self-sovereign anarchists control their money, data, and authority. Everything stems from self interest in a Hobbesian fight to the caveat emptor death. Anyone making a mistake, even by omission, deserves to be hacked, ripped-off, and ridiculed because they did not survive in the digital wild.
On the other hand, it is a communalistic dream of workers coming together in digital mini-states, take over the memes of production to generate self-owned financial bounty. Far from the hands of venture capitalists, investment bankers, and the Fed, our digital workers can live a life of pure universal token incomes.
Despite sounding entirely contradictory, both of these philosophies have taken root in the lands of blockchain. And when they have institutionalism as the target and institutions as the common enemy, then all is peaceful within the factions. We’ve written in detail about such culture.
But of course, when the markets are down and things are *tight*, the snake begins to eat its own tail. And this, as well as the shape of the snake and the shape of the tail, we find fascinating.
We present to you Aragon DAO, a project for creating onchain DAO utopias (i.e., our techno-communes), defending itself against the capitalist imperative to tear things apart for profit.
So what happened?
The Token-Treasury Disconnect
Aragon was early, very early. It saw the potential for digital organizations on Ethereum in 2017 and raised $25 million in 15 minutes during the popular winds of the ICO era. From there, it built an opinionated platform about how such organizations should be formed, wired together, and governed.