The NFT finance-oriented crypto collective, FloorDAO, recently underwent a division into two distinct entities as a strategic move to distance themselves from activist investors who had amassed a significant portion of the project’s governance tokens.
FloorDAO, with its focus on developing products for the emerging field of “NFT-Fi,” recently transferred over $2.5 million from its treasury, comprising cryptocurrency tokens and NFTs, to a splinter group known as FloorkDAO, which was under the control of the activist investors. These investors swiftly distributed this sum among themselves in a redemption process, resulting in a substantial increase in the value of each FLOOR token, raising it from $1.89 at the beginning of the year to nearly $5.
The remaining FLOOR tokens are currently trading at approximately $3.88, reflecting the value for those investors who opted to remain with FloorDAO and retain their holdings.
This event represents the latest instance of activist crypto investors launching campaigns aimed at decentralized autonomous organizations (DAOs), which are evolving into a form reminiscent of early blockchain-based companies. The allure lies in the fact that DAOs often possess substantial treasuries comprising funds from token sales and other revenue sources.
Activist investors seek to acquire governance tokens priced below the estimated value of the DAO’s assets and subsequently encourage the target project to buy them out at a more favorable price.
This strategy is made possible by the practice of many DAOs treating their issued tokens as governance assets. The more tokens one holds the greater influence one wields in the DAO’s decision-making processes. Since many long-term holders do not actively participate in project governance, activist investors can accumulate a significant and influential stake more easily.
In the case of FloorDAO, the activist investors had acquired a substantial stake to the extent that it was becoming increasingly challenging for the project’s committed supporters to accomplish meaningful objectives.
In response to this situation, a recent blog post announced, “FloorDAO has successfully executed a fork to allow members who do not align with the long-term vision of the DAO to exit.”