Rook DAO, a decentralized autonomous group (DAO) working within the decentralized finance (DeFi) house, made headlines just lately because it executed a “rage give up” that resulted in a major worth 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” just isn’t new on the planet of DAOs.
It refers to a scenario the place a member or group of members resolve to depart the group and withdraw their funds immediately and dramatically. This may occur for a wide range of causes, together with disagreements over governance selections, 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 beneath the pseudonym “DeFi Ignas”, as a part of the break up, IncubatorDAO acquired 60% of the treasury, which was valued at $25 million.
Nonetheless, 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 better flexibility by way of future funding alternatives. However there’s a catch.
1/ Fast replace on ROOK DAO: tokenholders get 57% of the treasury ($25M) in a by-product DAO. If rage give up course of is adopted by the spinoff DAO, RFV shall be $40.43.
— Wismerhill (@0xWismerhill) April 4, 2023
The USDC acquired from the sale of treasury property can solely be redeemed by Rook token holders till July twelfth. Which means in case you maintain ROOK tokens, you may alternate them for pROOK, a redeemable ERC-20 token that’s equal to USDC. After the deadline, the USDC shall be locked and inaccessible, successfully changing into nugatory.
The aftermath of the break up has been nothing in need of fascinating. On one hand, the value of ROOK has soared, making it one of many best-performing DeFi tokens of the yr.
However, the break up has created a brand new DAO, often known as the Honest Launch Initiative, which goals to advertise truthful and equitable distribution of rewards within the DeFi house.
As DeFi Ignas highlights, RooK DAO’s latest break up and subsequent distribution of USDC has raised a speculative query within the DeFi neighborhood; what share 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 worth of $59 means that speculators are placing a 50%+ premium on the value, probably betting that some holders will neglect to redeem their tokens.
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Nonetheless, there may be nonetheless $17 million value of USDC that is still unclaimed from the contract. This has led to additional hypothesis in regards to the potential actions of main gamers within the DeFi house, akin to Polychain Capital.
Polychain invested a “seven-figure sum” in ROOK tokens again in 2020 and just lately moved 100,000 tokens, value $5.8 million to a new address, probably to promote, in keeping with 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 may end in a base payout of 4 million USDC and an extra $4.7 million for his or her pROOK, assuming no different redemptions. Nonetheless, in the event that they select to promote on the open market, they may probably drive down ROOK’s worth.
Featured picture from Unsplash, a chart from TradingView.com