NFT finance-focused cryptocurrency group FloorDAO “branched” into two separate entities this week in a bid to shake off activist investors who had amassed an influential stake in the project’s governance tokens.
FloorDAO, which aims to build products for “NFT-Fi,” recently transferred more than $2.5 million of its treasury in crypto tokens and NFTs to a splinter group called FloorkDAO, controlled by activist investors. Investors quickly distributed and redeemed that amount among themselves, increasing the value of each FLOOR token from $1.89 at the beginning of the year to nearly $5. The remaining FLOOR tokens are currently trading around $3.88, indicating value for investors who did not choose to exit FloorDAO and remained holdings.
The episode marks the latest example of activist crypto investors waging a campaign targeting so-called decentralized autonomous organizations (DAOs), which are a primitive form of blockchain-based enterprise. I’m starting to get it. The advantage is that these DAOs often have large coffers filled with proceeds from token sales and other sources. Activist investors acquire governance tokens priced below the estimated value of the DAO’s holdings and attempt to influence target projects to effectively buy them out at a more favorable price.
This is possible because many DAOs treat issued tokens as governance chips. The more chips you have, the more say you have in DAO decision-making. Many long-term holders do not participate in the project’s governance, making it easier for activists to accumulate influential stakes.
At FloorDAO, their stake had grown large enough that the project’s most ardent believers felt it was becoming impossible to accomplish anything of substance.
“FloorDAO has now successfully forked out to allow members who do not align with the DAO’s long-term vision to leave,” a blog post earlier this week said. Said.