Rook DAO, a decentralized autonomous group (DAO) working within the decentralized finance (DeFi) area, made headlines not too long ago because it executed a “rage give up” that resulted in a major value surge for its native token, ROOK.
The transfer noticed the token’s worth skyrocket by a staggering 475%, making it one of many best-performing DeFi tokens this yr. However the idea of a “rage give up” is just not new on the earth of DAOs.
It refers to a state of affairs the place a member or group of members resolve to depart the group and withdraw their funds instantly and dramatically. This could occur for a wide range of causes, together with disagreements over governance choices, conflicts of curiosity, and even outright fraud.
Exploring The Rook DAO Phenomenon
Within the case of Rook DAO, the split was sparked by a dispute over the distribution of rewards. Some members felt that the rewards had been being unfairly distributed to sure people, whereas others believed that the system was working as supposed.
After a heated debate, a gaggle of members determined to execute a rage give up, withdrawing their funds and splitting the DAO into two separate entities.
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According to the researcher below the pseudonym “DeFi Ignas”, as a part of the cut up, IncubatorDAO obtained 60% of the treasury, which was valued at $25 million.
Nevertheless, as an alternative of holding onto the property, IncubatorDAO determined to promote them for USDC, a stablecoin pegged to the US greenback. This transfer was aimed toward offering liquidity to the token holders of each Rook and IncubatorDAO, in addition to permitting for higher flexibility when it comes to future funding alternatives. However there’s a catch.
1/ Fast replace on ROOK DAO: tokenholders get 57% of the treasury ($25M) in a derivative DAO. If rage give up course of is adopted by the spinoff DAO, RFV will probably be $40.43.
— Wismerhill (@0xWismerhill) April 4, 2023
The USDC obtained from the sale of treasury property can solely be redeemed by Rook token holders till July twelfth. Because of this in the event you maintain ROOK tokens, you may trade them for pROOK, a redeemable ERC-20 token that’s equal to USDC. After the deadline, the USDC will probably be locked and inaccessible, successfully turning into nugatory.
The aftermath of the cut up has been nothing in need of fascinating. On one hand, the worth of ROOK has soared, making it one of many best-performing DeFi tokens of the yr.
Alternatively, the cut up has created a brand new DAO, generally known as the Honest Launch Initiative, which goals to advertise truthful and equitable distribution of rewards within the DeFi area.
Deadline Dilemma
As DeFi Ignas highlights, RooK DAO’s current cut up and subsequent distribution of USDC has raised a speculative query within the DeFi group; what proportion of ROOK token holders will redeem their tokens for USDC earlier than the July twelfth deadline?
Whereas the truthful worth of ROOK is estimated to be $40, the present buying and selling value of $59 means that speculators are placing a 50%+ premium on the worth, doubtless betting that some holders will neglect to redeem their tokens.
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Nevertheless, there’s nonetheless $17 million value of USDC that is still unclaimed from the contract. This has led to additional hypothesis concerning the potential actions of main gamers within the DeFi area, equivalent to Polychain Capital.
Polychain invested a “seven-figure sum” in ROOK tokens again in 2020 and not too long ago moved 100,000 tokens, value $5.8 million to a new address, probably to promote, based on DeFi Ignas.
Moreover, Ignas believes that the choice of whether or not to promote or redeem the tokens is a strategic ready recreation for Polychain, as redeeming the tokens by July twelfth might end in a base payout of 4 million USDC and a further $4.7 million for his or her pROOK, assuming no different redemptions. Nevertheless, in the event that they select to promote on the open market, they may doubtlessly drive down ROOK’s value.
Featured picture from Unsplash, a chart from TradingView.com
