The NFT finance-focused cryptocurrency group FloorDAO “forked” into two distinct entities this week in a bid to oust activist investors who had collected a sizable holding in the project’s governance tokens.Recently, FloorDAO, which aims to develop goods for “NFT-Fi,” transferred more than $2.5 million of its cash to a FloorkDAO breakaway organization that was governed by the activist investors.Within a short period of time, the investors divided that money among themselves in a redemption, raising the value of each FLOOR token from $1.89 at the beginning of the year to almost $5.The value for investors who choose to hold onto their FLOOR tokens and not opt to sell them out of FloorDAO is demonstrated by the fact that they are currently trading at roughly $3.88.
The incident is the most recent instance of activist cryptocurrency investors launching campaigns against so-called decentralized autonomous organizations, or DAOs, which have begun to resemble what may be a very early stage of blockchain-based businesses.The benefit is that these DAOs frequently have substantial treasuries full of money raised from token sales and other sources. Activist investors try to buy up governance tokens at prices below the estimated value of the DAO’s holdings and then pressure the target project to essentially buy them out at a lower cost.
This is feasible as a result of the way many DAOs interpret the tokens they have issued as “governance chips,” where the more chips a user holds, the more influence they have over the DAO’s decisions.The activists can more readily amass a significant share because many long-term holders don’t participate in project governance.The most ardent supporters of FloorDAO believed that it was becoming impossible to make any significant progress because of their growing stake in the project.
“FloorDAO has now successfully forked to allow members who are not aligned with the long-term vision of the DAO to exit,” a blog post from earlier this week said.