Investors in the NFT-focused fork of OlympusDAO, known as FloorDAO, are expressing disappointment over the project’s failure to fulfill critical promises related to asset buybacks.
FloorDAO recently underwent a split into two separate entities in response to disagreements with FLOOR token investors regarding the project’s direction and its shift away from its arbitrage-friendly origins.
$2.5 Million Treasury Transfer to Splinter Group
FloorDAO, which aims to develop products for the “NFT-Fi” sector, transferred over $2.5 million worth of its treasury, comprising crypto tokens and NFTs, to a splinter group named FloorkDAO. This splinter group was controlled by activist investors and included numerous dissatisfied holders who chose to join the exodus.
Subsequently, FloorkDAO initiated a redemption process that paid nearly $5 per FLOOR token, closely approaching the token’s high-water mark for the year, while FLOOR was trading at $3.88. This exodus followed months of internal disputes within FloorDAO concerning its commitment to its obligations to FLOOR token investors.
Origins in OlympusDAO and FLOOR’s Book Value
FloorDAO originated as a spinoff of Olympus DAO, a protocol that was once influential in revolutionizing fundraising, token issuance, and treasury management. Considering this lineage, investors had anticipated that FloorDAO’s native token would maintain a value equal to or above that of its treasury, commonly known as its “book value.”
The project’s initial documentation explicitly stated that in the event of the token’s value falling below its book value, a mechanism for “theoretical arbitrage” would be executed by dissolving the DAO and distributing its assets.
Abandonment of Redemption Promise
Despite the theory outlined above, when FLOOR’s price dropped below book value, the promised mechanism failed to materialize. Moreover, discord records and longtime investors revealed that project insiders had pledged to introduce a redemption mechanism to rectify this issue.
However, along the way, they abandoned this promise and instead planned a protocol upgrade. That removed voting power and treasury rights from token holders.
Rise of Activist Investors and Project Split
A segment of FloorDAO’s community began opposing the planned “v2” upgrade, demanding an exit from the DAO and a share of the treasury before the upgrade took effect. They viewed the upgrade as a departure from the project’s original vision and future promises. These holders consistently voted for token buybacks rather than the acquisition of more NFTs for the treasury.
Eventually, FloorDAO’s insiders acknowledged the growing influence of this dissatisfied bloc and decided to split the project into two groups – one retaining the name and NFT focus and another, FloorkDAO, serving as an escape route for disillusioned investors.
Activist Investors in DAOs and Their Influence
Furthermore, this incident highlights the rising influence of activist investors within decentralized autonomous organizations (DAOs). DAOs often treat issued tokens as governance tools, granting more influence to holders with larger token stakes. Project insiders perceive this coordination as an attack on the DAO.
In the case of FloorDAO, the split accommodated members who didn’t align with the long-term vision, allowing them to exit. Activist and investors see themselves as protecting their positions and the interests of fellow token holders who also join them in leaving the project. Lastly, the broken promise of redemptions played a significant role in setting the stage for this exodus.