The Mango DAO reportedly ‘died’ last week after John Kramer and Max Schneider gained significant voting control while also allegedly violating a settlement with the Securities and Exchange Commission (SEC).

The pair successfully completed a proposal last Saturday to distribute 67.5 million MNGO options after locking up 80 million tokens. However, Mango Labs founder Dafydd Durairaj claims their proposal  “would likely count as a sale of MNGO and would jeopardize our settlement with the SEC.” 

He advocated against the proposal in the Mango DAO Discord, claiming, “The SEC could reopen the case, and we might face consequences from the court for violating the settlement. This puts all of us in grave jeopardy.”

The proposal also “cements their total control over the DAO,” and allows them to outvote proposals with a large majority of votes. X user @Henry_E__ posted, “RIP Mango DAO 2021-2024,” and said the pair’s proposal “marks the effective end of Mango DAO.”

In the Mango DAO discord, Schnieder claimed his request for a distribution of a “so far vested grant” shouldn’t break the SEC proposal as “This is a pre-existing agreement of the DAO, it should be honored now.”

The proposals requested 60 million and 7.5 million token options for payments it claims were due on October 4 and November 17 respectively. Schnieder also said the proposal won’t give him a voting majority and claims Durairaj is “talking nonsense to distract people and enrich yourself by breaking every promise you gave me.”

The settlement with the SEC dictates that Mango DAO, Blockworks Foundation, and Mango Labs must destroy their MNGO tokens, pay a $700,000 fine, and make sure no other platforms trade the token.

The entities neither admitted nor denied the unregistered security allegations the SEC brought against them. 

Read more: MNGO from FTX estate vote for Mango Markets buyback proposal

Schnieder and Kramer are core Mango DAO members. A lawsuit filed by Mango Labs in October accuses the pair of embezzling $10 million from the DAO during the trial of Avraham Eisenberg, another major figure in Mango’s history who was found guilty of fraudulently obtaining $110 million. 

Last October, the Mango DAO had just avoided falling foul of the SEC’s settlement after a proposal to pay the SEC fine was rejected. Fortunately, a follow-up proposal was later accepted.

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The Mango Market DAO failed to pass a proposal to pay off the Securities and Exchange Commission’s (SEC) $700,000 settlement after a major voter withdrew their vote hours before the deadline.

The proposal required 2% of participants to vote ‘yes’ so that $669,684 USD from the Mango DAO escrow account could be used to settle with the regulator.

According to X user @Henry_E__, the vote passed the 2% minimum threshold with 100 million votes. However, someone withdrew 80 million votes hours before the deadline and the vote failed to pass. Only three voters were registered by the time the deadline had passed. 

Read more: MNGO from FTX estate vote for Mango Markets buyback proposal

At this point, the vote could not be saved because, as Henry pointed out, no new ‘yes’ votes can be submitted 24 hours before the deadline. In this period, votes can only be withdrawn or submitted against the proposal. Another 52.2 million ‘yes’ votes were required for a successful verdict. 

Mango DAO still has a chance to pay the SEC

Despite the failure of this proposal, there is another vote, identical to this one, that has passed the quorum threshold with two days left until the deadline. This proposal currently has 210 million ‘yes’ votes from five voters and may result in the Mango DAO voting to pay the SEC.  

The SEC charged Mango DAO, Blockworks Foundation, and Mango Labs with various securities violations relating to unregistered offerings of MNGO and unregistered brokering. 

Last month, the SEC settled these charges. As part of the settlement, all three parties were not required to admit to or deny, the allegations put forward by the SEC. It was also agreed that all MNGO tokens would be destroyed. 

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In a very public tiff, PleasrDAO — an a16z and Paris Hilton-funded ‘DAO’ with 74 members, according to a 2021 New York Times article — has decided to sue Martin ‘Pharma Bro’ Shkreli regarding his distribution of a Wu-Tang album that he originally purchased in 2015.

The album was seized by the US government and sold to PleasrDAO after Shkreli was convicted of securities fraud.

According to the original sale of the album, called Once Upon a Time in Shaolin, it cannot be commercially exploited until the year 2103. Shkreli has streamed portions of the album on YouTube and has admitted to making copies of it and distributing it to friends. It remains unclear if this violates the agreement of the original sale.

A temporary restraining order has been put in place which ensures that — at least for the time being — Shkreli is unable to play the album publicly.

He attempted to sell the album on eBay, where bids hit one million dollars before it was removed from the auction site, back in 2017.

Read more: Martin Shkreli tells reporter to ‘lick my balls,’ New York cancels his crypto event

While it’s impossible to know who will win the case, Shkreli has made it clear that he plans to attack the idea that PleasrDAO is a DAO at all (although, as Hayden Adams of Uniswap pointed out, PleasrDAO has never really been a traditional decentralized autonomous organization) and that with proper due diligence, it would have known that Shkreli had widely distributed it before the DAO purchased the album.

It’s unclear what PleasrDAO hopes to get from Shkreli outside of a few million dollars, at best, as the former pharmaceutical CEO has lost most of his money. Sadly, the former founder and face of PleasrDAO, Jamey Johnson, was placed in a medical coma last year after suffering a serious injury in an ATV accident and hasn’t been heard from since.

Protos reached out to PleasrDAO on X, but it did not comment.

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USDD is a massive stablecoin that describes itself as ‘algorithmic’ and has a market capitalization of approximately $730 million. However, despite this size and seeming importance, it has a variety of issues, from its design to its reserves and its partners.

Changes to USDD

When USDD was launched, it was intended to inherit an algorithmic design reminiscent of the Luna-Terra system. The original whitepaper described how, by the end of 2022, Tron version 5.0 was going to be released, which would integrate USDD minting and redemption directly into the core of the protocol. However, as of press Tron version 5.0 has yet to be released. 

This version was meant to actually ‘burn’ the tron (TRX) used to issue new USDD; currently, the TRX that is ‘burned’ isn’t burned but instead held in a wallet and counted as collateral for the token.

Following the collapse of the Luna-Terra system, more recent whitepapers for USDD no longer mention being integrated into the core of Tron in this way. Additionally, USDD currently has no documented mechanism to redeem USDD.

Protos has reached out to Tron Network and USDD to see when version 5.0 will be released and whether or not it will integrate USDD in the manner described in the original USDD whitepaper. 

Is it even a DAO?

USDD is managed by the Tron DAO Reserve (TDR), which you would assume is a decentralized autonomous organization (DAO), but unfortunately, it doesn’t meaningfully fulfill that role. 

The governance page shows only a single proposal in the entire history of this protocol. This proposal allowed for the TDR to use the ‘burned’ TRX, despite that appearing to be inconsistent with what the word ‘burned’ means. 

There are no proposals that describe how the reserves are held, no proposals that explain why the direction of the protocol has changed, and no proposals that explain why certain partners have been added or removed for TDR. 

Does HTX have the funds it is supposed to?

USDD lists TZ1SsapyhKNWaVLca6P2qgVzkHTdk6nkXa as one of the addresses that hold the collateral for USDD. This address holds approximately 972 million TRX, worth approximately $120 million. It is also important to note that almost all of these tokens are staked. These funds, which are nominally managed by TDR, are also included in the HTX proof-of-reserves, which suggests that they’re currently held at HTX. 

There are no governance proposals that explain why these funds are being held in this way. Protos reached out to HTX and TDR but they didn’t provide clarification on why these funds are held in this way. HTX did claim that “the platform has never had any security incidents in the past 10 years,” despite this not being true. When asked for clarification about the previously disclosed security incidents, HTX reiterated that no security incidents had occurred. 

Issues with partners

USDD relies on the partners in the TDR to manage issuance of the token, a role that has become more important as USDD has seemingly abandoned its goal of integrating issuance directly into the core of Tron.

Alameda Research, the now-bankrupt trading firm that was embezzling billions of dollars worth of customer funds from FTX and was owned by financial criminal Sam Bankman-Fried, was just one of the partners for this product who have experienced significant issues. 

Justin Sun, an ‘advisor’ to HTX and a frequent promoter of USDD, owns Poloniex, an exchange that is one of the other partners. Poloniex has yet to finish a promised proof-of-reserves and has refused to disclose the reserves for its WBTC on Tron product, a significant portion of the ‘bitcoin’ on HTX.

Read more: Justin Sun’s empire crumbles as USDD depegs again

Multichain was a bridge before it was hacked, its chief exec was arrested, and the remainder of the team has lost access to the web presence and most of the other materials. Despite these issues, it’s still listed on the USDD website.

TPS Capital (also known as Tai Ping Shan) is listed as a partner, despite its website no longer being available. TPS Capital was an over-the-counter (OTC) trading desk that was deeply connected to Three Arrows Capital. 

FalconX is listed as a partner and also recently settled with the Commodity Futures Trading Commission over charges of failure to register as a futures commission merchant. 

Other partners include Mirana Ventures, Amber Group, and Ankr. 

Protos has reached out to all of the current partners except for TPS Capital and Multichain to determine if they are concerned about collateral for USDD being stored at HTX and whether or not they participated in any type of governance process to choose to store the assets there. At time of publication, none of them have responded.

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Recently, the SushiSwap community voted on a proposal that signaled support for transferring nearly the entirety of the treasury from the DAO to a ‘Labs’ entity. Sushigov.eth, the operational multisig for SushiSwap, voted for the first time in a governance proposal, voting ‘Yay’ with 5.5 million SUSHIPOWER, the largest individual voter, and approximately 30% of the votes in favor. 

Recently, sushigov.eth received significant quantities of Sushi, including approximately 1.9 million on April 4, from 0x4bb4c1B0745ef7B4642fEECcd0740deC417ca0a0, an address that resolves to *.eth. It also received an additional 1.78 million Sushi on April 3, as well as two additional deposits of 1.9 million and 1.8 million from that same address. 

This signal vote passed by a margin of approximately 8 million votes.

Sushi’s restructuring

This is the latest step in what’s become a years-long effort for the oft-controversial Sushi organization to restructure itself. Since then, Sushi has deleted or privated discussion of these changes on its governance forum. 

In 2022, the Sushi community voted to begin restructuring and, as part of this process, received advice from law firm Fenwick & West. 

The following year, Sushi launched a new proposal noting that it intended to switch its legal advice from Fenwick & West to Gresham International. The forum discussion of this change is also no longer available at the address in the proposal but a review of archives and an address shared by Jared Grey, the ‘Head Chef’ of Sushi, reveals a community note in which a user claims that they have “been in the legal industry most of my career and I’ve never heard of Gresham. So I’m not sure they are a leading international firm.”

Jared Grey, Sushi’s ‘head chef,’ defended the decision by noting that Gresham International “worked with many projects in the space” and further added that Fenwick’s proposal “wasn’t sufficient to meet the needs of the DAO.” 

Gresham International’s website does note several projects it has worked for in the space, including RadioShack, as well as less well-known firms like CryptoCammel mining, ArabChain, Quantum Kingdom of Zululand, and AFCash a token issued by Africunia Bank (note: this does not seem to be a bank).

Read more: SushiSwap team wants to kill DAO to benefit themselves

Protos had asked whether or not Gresham International had advised Sushi on the recent movement of assets from the DAO to the new Labs entities, to which Evans responded, “We cannot comment on any work that we undertake for clients as a matter of privacy.”

Gresham International’s Gitbook notes that a project it previously worked with, Aubit, had significant problems, including “criminal activities.” However, it also noted that Aubit “switched to their own in-house team and the use of other third party counsel for some years since our engagement.”

This is followed by another post related to a lawsuit that named Gresham. The firm noted, “As Gresham US is a company that has worked with Wyoming and its legislature, we are aware that Wyoming is forward thinking and we consider the state to be a friend of Gresham International. We have no doubt that a Jury and Judge will see this lawsuit for what it is and who the parties involved are.”

Currently, the implementation vote to continue the movement of assets from the DAO to the Labs entity currently has approximately 99% ‘Yay’ votes, including, of course, sushigov.eth. 

Update 2024-04-24 16:47 UTC: Removed discussion of Gresham International’s awards after Gresham International was able to provide documentation for the awards.

Update 2024-04-24 14:38 UTC: Added note from Jared Grey about discussion of law firm.

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Arbitrum-based Plutus DAO has announced plans to scrap its long-depegged plsARB token, allowing users to redeem their underlying ARB tokens 1:1.

However, not all users are happy. Some feel betrayed after they decided to exit at a loss, with others even suspecting insider trading around the announcement.

Plutus DAO launched plsARB in March 2023 to capitalise on the ARB airdrop. The DAO aimed to secure an influential governance position on Arbitrum and activate a native ARB staking programme, rewarding depositors to encourage participation.

The proposal to activate a staking programme in October 2023 received pushback and criticism on the Arbitrum governance forums.

As stated in yesterday’s announcement, “The path toward activating native staking yield for plsARB has been more arduous than anticipated, significantly impacting the product’s appeal.”

The team admitted that lobbying the Arbitrum ecosystem to activate a native staking programme for ARB, was ultimately unachievable: “Despite our efforts, we’ve concluded that the complexity of crafting and passing a compelling governance proposal exceeds our current capabilities,” it said.

Read more: Opinion: Arbitrum misunderstands the definition of ‘proposal’ and ‘DAO’

Redemption?

Yesterday’s decision to wind down the product will allow remaining plsARB holders to finally redeem their off-peg assets for the underlying ARB tokens.

Although users’ ARB deposits were a one-way street, exit liquidity was provided via a plsARB/ARB liquidity pool on the Camelot decentralized exchange. However, as confidence in the project waned, the price of plsARB against the underlying ARB suffered as holders decided to cut their losses.

While many plsARB bagholders may be thrilled at the chance to finally exit their positions, frustrations were voiced by those users who had exited at a significant loss recently, fed up with a lack of communication from the team.

Plutus DAO’s previous official communication, published December 29, suggested there were no change in plans for plsARB, which the team believed would be “very lucrative for users in the future once ARB staking goes live”.

Others were angry that redemptions had not been allowed earlier, despite apparently being an option for select individuals.

Read more: SushiSwap team wants to kill DAO to benefit themselves

With plsARB/ARB trading below 0.5 for much of the second half of 2023, and around 0.6 as recently as April 6, some believe the price action in the lead-up to the announcement looks suspiciously like insider trading.

When the announcement was published, the plsARB peg hit 0.98, up from 0.75 directly before the announcement. At the time of writing, plsARB is worth approximately 0.92 ARB.

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A new governance proposal for SushiSwap proposes moving the assets from the ‘DAO’ controlled treasury to a new ‘Sushi Labs’ and will make sure that all future airdrops are directed to the ‘Labs’ instead of the ‘DAO.’

The funds the proposal would transfer to the new entities are effectively the entire treasury for the project. However, the proposal also seems to include assets that aren’t included in the ‘Treasury’ wallet listed on the governance page for SushiSwap. Indeed, the proposal lists both 168 ether and 1,228 ether, but the wallet in question only seems to contain 168. Additionally, it doesn’t seem to contain any of the Dai or WBTC mentioned in the proposal. 

Jared Grey, the ‘Head Chef’ of Sushi reached out to Protos to claim that the additional assets are located in an “operations wallet since before my time as Head Chef. FYI, the operations multisig is publicly well-known and readily available for review.” This “operations wallet” is still not listed on the ‘Treasury’ page on the Snapshot DAO governance platform for Sushi.

Furthermore, this proposal intends to “empower Sushi Labs with exhaustive and sole operational responsibility for core product development.”

This comes a little over a month after Naïm Boubziz, formerly associated with SushiSwap, took to X to highlight that the governance forum for SushiSwap had been deleted. Grey claims that this forum had not been deleted but instead claims Sushi “migrated forum software providers to reduce user spam, and some historical links do not auto-redirect to the new archive.” Grey provided a link to the discussion in question, which interestingly, had never before been archived on Wayback Machine or Archive Today.

This was followed by a change to the DAO, which made it so only core team members could create new proposals. Grey claimed in an email to Protos that this “has been the DAO precedent for years; the core team has not recently changed it.” However, the page linked by Grey does not claim that only Core team members can submit proposals, it states that “only proposals posted to the Snapshot voting system by the CORE can be considered binding if passed with a quorum.”

This change apparently included removing snapshot votes, which were challenging the treasury management of the Sushi team.

More recently, Boubziz took to X to criticize the new proposal, claiming that it was intended to “kill the DAO.” 

Read more: MakerDAO could back a billion Dai with Ethena’s ‘synthetic dollar’ USDe

The signal vote on this proposal currently has approximately 93% of participants voting ‘Nay.’ The vote will run until April 9. Despite the large proportion of votes against this idea, there is also a snapshot pending that covers the ‘implementation’ of this proposal, scheduled to begin voting on April 9.

Update 2024-06-10 14:24: Added comments from Jared Grey of Sushi.

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Aave governance discussions have been heating up recently. Two separate groups of advisors have left, and the protocol has faced criticism regarding a controversial rewards system designed to punish those who use competing platforms. 

Widely regarded as one of decentralized finance’s (DeFi) most mature governance systems, (although the bar isn’t particularly high) Aave holds over $8 billion of assets, but it’s not without its share of drama.

Aave is governed as a decentralized autonomous organisation (DAO) in which AAVE token holders vote on any changes.

Although one token equates to one vote, influential parties within DAOs often emerge, be it due to the concentration of governance token holdings (e.g. team members or early investors) or as service providers paid to advise on specific topics.

Read more: Curve exploit shows DeFi still far from decentralized in 2023

Gauntlet calls it quits

On Wednesday, Aave’s longtime risk management service provider, Gauntlet, announced its decision to walk away from the role it held since 2020.

Risk management is especially important for lending protocols, which must decide on which collateral assets to accept and adjust protocol parameters in response to market conditions. 

Outsourcing this work to dedicated service providers, Gauntlet and Chaos Labs, rather than relying on AAVE holders to keep track, cost the Aave protocol $3.2 million per year.

Gauntlet co-founder John Morrow laid out the reasons that “Gauntlet is no longer able to continue [its] work with Aave,” which included “inconsistent guidelines and unwritten objectives of the largest stakeholders.”

Morrow cites strong opposition to Gauntlet’s contract renewal in November 2023, as well as another example in which Gauntlet received strong criticism while a similar proposal by Aave’s other risk manager, Chaos Labs, went smoothly.

The examples given in Morrow’s statement are telling, in that they are all published by governance delegate Marc Zeller, representing the ACI faction of AAVE holders.

The relationship between Zeller’s ACI and Gauntlet has been strained for some time. Zeller’s recent criticisms have included Gauntlet’s slow reaction times to a fast-moving industry and perceived moonlighting for competition.

In response to Morrow’s statement, Zeller suggests that Gauntlet’s move is that of a  “mercenary” looking elsewhere for a better opportunity after having benefited from the “prestigious” role with Aave.

Merits and demerits 

Never shy of ruffling feathers, Zeller has also come under fire for a proposed new incentive system for Aave users.

The proposed ‘Merit programme’ would use protocol revenue to reward ‘Aave-aligned’ user behaviour, but would include dilution of any rewards for users of ‘non-aligned protocols.’ 

Currently, only one project has been labelled as ‘un-aligned,’ namely Morpho, whose CEO sees the move as Aave “attempting to prevent the growth of Morpho.”

Morpho’s Aave Optimizers, which Zeller refers to as a “leech,” operate on top of Aave, matching borrowers and lenders peer-to-peer. Their users would have any rewards diluted up to 100% — the stick — whilst also being eligible for a boost for migrating assets out of the optimizers and back to Aave — the carrot.

Zeller frames the 90-day pilot programme (worth $2.1 million) as a first step in the long-term redistribution of profits to users. 

However, the punitive aspect doesn’t sit well with some, who feel it goes against the DeFi ethos of user choice and disincentivizes innovation.

The proposal has been moved to a Snapshot vote, an intermediary (off-chain) sentiment check, before potentially moving forward to a full on-chain vote.

Time to GHO

Last week, the resignation of a member from the GHO Liquidity Committee, known as ‘TokenBrice,’ was accompanied by a tirade about ”theater” and “newspeak” in DeFi.

Aave had tasked the Liquidity Committee with maintaining the peg of GHO, Aave’s own stablecoin, which has tended to trade below peg since its inception in July last year.

The damning resignation statement from the departing member describes inefficiencies, poorly defined scope, and the danger of “governance professionals” who may have conflicts of interest.

Read more: Here’s why decentralized finance is actually very centralized

These ‘DeFi politicians,’ TokenBrice claims, use the committee “like a big bag of cash … to direct to protocol they have an interest in.”

The article also discusses DeFi more widely, stating that public governance forums are “just a stage” while the actual decisions are made “backstage.”

Meanwhile, in the Aave governance forums, the show continues. Three days remain to see what will happen next.

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Blockchain developer Martin Krung has proposed replacing decentralized autonomous organizations (DAOs) with what he calls a decentralized hierarchical organizations (DHO). Specifically, he proposes elected leaders and hierarchical decision-making as a compromise between pure decentralization or centralization.

Krung acknowledges that DHOs are more appropriate for general organizations like hobbyist communities rather than financial applications like decentralized exchanges (DEX). Regulators like the Financial Action Task Force (FATF) and the Securities and Exchange Commission (SEC) will most likely claim jurisdiction over financial platforms, forcing them to choose between complying with regulations or becoming fully decentralized.

Krung admitted, “for money protocols, hierarchies are difficult because many can’t be compliant, so total decentralization is the only way.”

ShapeShift DAO: Would a DHO have been a better choice?

Indeed, many financial platforms don’t comply with regulations. For example, one of the oldest crypto exchanges, Erik Voorhees’ ShapeShift, chose to become a DAO during the summer of 2021 after financial regulators forced Voorhees to implement know-your-customer (KYC) and anti-money laundering (AML) checks.

Ultimately, ShapeShift decided to avoid many KYC/AML requests under the guise of allowing its FOX governance token holders to decentralize the platform.

However, in practice, a dwindling number of people care about governing ShapeShift. The FOX token has lost 98% of its value since April 5, 2021.

Voorhees was once a proponent of Bitcoin, calling it the opening move toward “an open, immutable financial system” that would be difficult for any government to control. Nowadays, he spends most of his time promoting a ShapeShift competitor, ThorChain. He recently recommended an explanation of ThorChain that concluded, “ThorChain loans provide free money. Free Money. F*cking fantastic. Go go ThorChain.”

Perhaps a DHO would have been a better choice than a DAO for ShapeShift.

Read more: Curve exploit shows DeFi still far from decentralized in 2023

Community chimes in on DHOs

People began to suggest various types of decentralized hierarchical systems (DHS). For example, some called for decentralized autonomous corporations that would allow eligible voters to periodically elect senior officials. Each position’s duties and authorities could be coded.

Others, meanwhile, seemed skeptical that any system allowing elected officials could function well. Mirroring their cynicism around real-world “democratic” governments, they doubt the long-term viability of a DHS.

For his part, Krung seemed to think some issues could be solved with checks and balances, like a Kleros-like decentralized arbitration system. Nimble adjustments to the code could simply kick someone out of the organization. The organization could also make voting anonymous to protect voters in case of a controversial topic.

Others suggested “reputational weighted voting,” in which voters would have more clout if they had a higher reputation score. It could also provide an alternative to favoring wealthier voters who can afford more governance tokens. Delegations have also become an issue in blockchain governance, whereby token holders convince community members to delegate their votes to an ally, which has become an issue for UniSwap and many other DAOs.

In summary, Krung has suggested a new type of blockchain community that’s neither decentralized nor centralized. His so-called DHOs could solve some of the issues with DAOs struggling with autonomy. Any organization needs a way to make decisions; sometimes, those decisions must occur quickly. Naturally, the idea of DHOs was not universally popular, with plenty of comments in support and contention.

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BarnBridge DAO’s legal counsel has claimed that the Securities and Exchange Commission (SEC) is investigating the allegedly decentralized organization. BarnBridge immediately terminated its liquidity pools, stopped creating new ones, and halted compensation to developers.

Lawyer Douglas Park posted the announcement on Discord and BarnBridge tweeted it. Park said neither he nor fellow BarnBridge team members, Tyler Ward and Troy Murray, would comment on the ongoing investigation.

Discord member Lord Tyler (possibly Tyler Ward himself) replied, “Confirming this is real.”

Token-holders held personally liable

There’s legal precedent for lawsuits personally affecting members of a decentralized autonomous organization (DAO). The US Commodities Futures Trading Commission (CFTC) won a sweeping victory against governance token-holders of another DAO called Ooki, with a judge agreeing that its members had to pay substantial fines and take down their website.

Explaining his ruling, a US district judge wrote, “The DAO offers the Protocol to users in the United States; Token-holders voted their tokens while in the United States; and the founders of Ooki DAO’s predecessor LLC engaged in acts on behalf of the DAO during the relevant period while they were in the US.”

This provided plenty of jurisdiction for the ruling and made a mockery of any claims of decentralized operations.

Indeed, the violations of the DAO were the fault of its individual tokenholders, explained the judge. “Ooki DAO, through its token-holders, controlled the existence and operation of the Ooki Protocol by voting their tokens to take actions such as updating code, pausing and suspending trading, and directing deposits of funds to users.”

The BarnBridge audit never came

BarnBridge claimed to offer “DeFi-native solutions for yield and credit.” As recently as May 22, it claimed that a security firm called Spearbit was auditing its FIAT II credit marketplace protocol. 

However, the audit never came. For the record, its treasury is worth $0 and there are less than a dozen active users of the allegedly decentralized protocol.

Like many other supposedly decentralized finance applications, BarnBridge was not meaningfully decentralized. Indeed, its official team members simply ‘turned off the lights’ as soon as the SEC decided to investigate.

The law, not code, is law

The suspension of BarnBridge DAO by one lawyer does seem to fly in the face of “code is law” claims from decentralization idealists. Leaders can shut everything down when facing an obstacle like an SEC investigation.

With this suspension of service, BarnBridge risks joining the ranks of Decentralized In Name Only (DINO) protocols like Celsius Network, Anchor Protocol, American CryptoFed, and the original DAO.

Read more: How decentralized is DeFi, really?

BarnBridge is just another example of a small team of insiders controlling allegedly decentralized organizations. Whenever token-holders realize that they might be personally liable for the DAO’s actions, multi-million dollar DeFi applications can shutter within hours. BarnBridge has become the latest example of the shortcomings of DeFi governance.

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