Source: Adobe/Galina_lya
FloorDAO, a crypto group focused on NFT finance, has split into two separate entities due to disagreements among investors.
The project, which aims to develop products for “NFT-Fi,” transferred over $2.5 million from its treasury, consisting of crypto tokens and NFTs, to a splinter group called FloorkDAO.
The group is controlled by activist investors who were dissatisfied with the project’s direction.
The move initiated a redemption process that paid nearly $5 per FLOOR token, close to its highest value this year, despite the current trading price being $3.88.
The division within FloorDAO comes after months of internal conflicts over the project’s commitment to its obligations towards FLOOR token investors.
FloorDAO originated as a spinoff of Olympus DAO, a significant protocol that revolutionized fundraising, token issuance, and treasury management.
Given its lineage, FloorDAO’s native token was expected to maintain a value equal to or higher than its treasury’s “book value.”
The project’s initial documentation outlined a mechanism to address any discrepancy, allowing for asset distribution in the event of a fall below book value.
However, when the price of FLOOR inevitably dropped below book value, the theoretical arbitrage mechanism did not come into effect.
Last year, project insiders promised to introduce a redemption mechanism to rectify this issue, according to Discord records and conversations with long-term investors.
However, they later abandoned this promise and instead planned a protocol upgrade that removed voting power and treasury rights from token holders.
FLOOR Community Started Opposing Before V2 Upgrade
Before the implementation of the “v2” upgrade, a subset of the FLOOR community began opposing it, demanding the opportunity to exit the DAO and claim their share of the treasury prior to the upgrade.
They viewed the upgrade as a betrayal of the project’s original principles and future promises.
These token holders consistently voted for buybacks of their tokens instead of acquiring more NFTs for the treasury.
Ultimately, FloorDAO’s insiders acknowledged the growing influence of the dissatisfied bloc and decided to split the project.
A vote earlier this year paved the way for FloorDAO to divide into two groups: one retaining the original name and NFT focus, and another called FloorkDAO, which served as an escape hatch for disillusioned investors.
The emergence of FloorkDAO reflects the increasing power of activist investors within decentralized autonomous organizations (DAOs).
Projects that struggle to find product-market fit or maintain their token’s book value have faced pressure from investors to initiate buyouts rather than continue to spend from the treasury.
Many DAOs consider their issued tokens as governance chips, with more tokens equating to greater decision-making power.
Arbitrage investors often acquire tokens trading below book value and then advocate for mechanisms that allow them to cash out, leading to an activist approach.
While project insiders view the actions of activist investors as an attack on the DAO, the activists consider themselves as safeguarding their positions and the interests of all token holders who join them in their discontent.
“FloorDAO has now successfully forked to allow members who are not aligned with the long-term vision of the DAO to exit,” a blog post from earlier this week said.
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