Two Gaming DAOs Skirmish Over Funding Deal Turned Sour

The 2 most outstanding gaming-focused decentralized autonomous organizations, Yield Guild Video games and Advantage Circle, have been embroiled in a close to week-long dispute over a seed funding deal allegedly gone bitter. The battle has piqued the curiosity of many business pundits, elevating questions in regards to the intersection of regulation and decentralized governance.

Advantage Circle DAO Proposes Ousting YGG

A member of the Advantage Circle DAO has proposed revoking the group’s early-investment take care of Yield Guild Video games.

The 2 largest play-to-earn gaming guilds have been struggling to discover a compromise for practically per week after a member of the Advantage Circle DAO posting underneath the pseudonym HoneyBarrel submitted a governance proposal to null its early funding take care of Yield Guild Video games. Citing the shortage of “worth add” that YGG had allegedly failed to supply to Advantage Circle as the first cause, the proposal steered unilaterally canceling YGG’s SAFT (Easy Settlement for Future Tokens) and returning the gaming guild’s preliminary funding again. It mentioned:

“The Advantage Circle DAO wants seed buyers who’re including worth. That is one thing that the workforce, group, and buyers agree upon. I’ve demonstrated that YGG doesn’t match into this standards. They’re opponents who’re solely concerned about extracting worth, and revenue, from the DAO, and their actions go in opposition to the moral rules that Advantage Circle upholds.”

HoneyBarrel then proposed terminating the monetary obligations that Advantage Circle DAO has with YGG by refunding YGG its 175,000 USDC seed funding and eradicating its seed tokens. In response to the proposal, the YGG DAO published an official assertion right now, countering that the authorized settlement with Advantage Circle Ltd had no “value-add” situations and represented a easy capital for fairness trade. It mentioned:

“This seed funding was supplied in trade for future tokens to be deployed in line with a pre-defined vesting schedule. There have been no situations within the SAFT that relate to “value-add” companies. It solely referred to as for the funding of capital.”

Moreover, YGG argued that it “had the truth is supplied significant worth to Advantage Circle,” though it was underneath no obligation to take action, and reassured the Advantage Circle group that it deliberate to proceed doing so sooner or later.

Though the Advantage Circle DAO is but—if ever—to vote on HoneyBarrel’s proposal, its group members’ overarching sentiment appears to be largely in favor of it. “I agree with Honey and can vote Sure [In favor of nulling the SAFT with YGG] on this matter,” one of the crucial appreciated comments within the thread learn. Unhappy Cat Capital, a enterprise capital agency concerned with the Advantage Circle DAO, additionally said that it might be voting in favor of the proposal as a result of it was disenchanted with YGG’s response, which allegedly demonstrated “how little worth they’ve added over the previous 7 months.”

Governance Proposal Sparks Debate

Past the 2 DAOs, the controversy has spilled over to the broader crypto group, with a number of business consultants chiming in with their takes on the matter. Miko Matsumura, an early-stage investor and builder who has admittedly invested in YYG, mentioned on Twitter right now that Advantage Circle’s potential deviation from the contract with YGG would set a horrible precedent for DAOs. He said: 

“I imagine it’s a horrible precedent for @MeritCircle_IO to be permitting their DAO to vote on breaching signed contracts each from a authorized and moral perspective. It destroys the belief in DAOs if they will merely vote to interrupt agreements on a whim.”

Notable cryptocurrency researcher Hasu additionally expressed issues over the potential of DAOs overturning legally-binding guarantees that the authorized firms behind the tasks have made prior to now. “Seeing a DAO so nonchalantly take into account contract breach ought to inform you all you must learn about ‘governance of the folks and why it doesn’t work,” he said.

However, some group members have raised opposing issues, arguing that DAOs ought to be capable to resolve on all issues involving the underlying tasks. “If the group feels strongly to cancel their SAFT, why shouldn’t they? A decentralized venture can and may tackle a lifetime of its personal. That is a part of decentralized governance,” one consumer said on Twitter right now.

The skirmish between YGG and Advantage Circle is probably going the primary governance dispute between two DAOs involving authorized components that spill outdoors the crypto sphere and into the true world.

Disclosure: On the time of writing, the writer of this piece owned ETH and a number of other different cryptocurrencies.